LogoLogo
Return to StockChartsCharts & ToolsArticlesChartSchoolYour Dashboard
  • 📋ChartSchool
  • Table of Contents
    • Overview
      • Why Analyze Securities?
      • Technical Analysis
      • Fundamental Analysis
      • Random Walk vs. Non-Random Walk
      • Asset Allocation and Diversification
      • John Murphy's 10 Laws of Technical Trading
      • John Murphy's "Charting Made Easy" eBook
      • Technical Analysis 101
        • TA 101 – Part 1
        • TA 101 – Part 2
        • TA 101 – Part 3
        • TA 101 – Part 4
        • TA 101 – Part 5
        • TA 101 – Part 6
        • TA 101 – Part 7
        • TA 101 – Part 8
        • TA 101 – Part 9
        • TA 101 – Part 10
        • TA 101 – Part 11
        • TA 101 – Part 12
        • TA 101 – Part 13
        • TA 101 – Part 14
        • TA 101 – Part 15
        • TA 101 – Part 16
        • TA 101 – Part 17
      • Irrational Exuberance
      • Cognitive Biases
      • Arthur Hill on Goals, Style and Strategy
      • Arthur Hill on Moving Average Crossovers
      • Multicollinearity
      • "The Trader's Journal" by Gatis Roze
        • Stage 1: Money Management
        • Stage 2: Business of Investing
        • Stage 3: The Investor Self
        • Stage 4: Market Analysis
        • Stage 5: Routines
        • Stage 6: Stalking Your Trade
        • Stage 7: Buying
        • Stage 8: Monitoring Your Investments
        • Stage 9: Selling
        • Stage 10: Re-Examine, Refine, Re-Enhance
        • Additional Reading
      • Bob Farrell's 10 Rules
      • Richard Rhodes' Trading Rules
      • Donchian Trading Guidelines
      • Why and How To Use Correlation
    • Chart Analysis
      • What Are Charts?
      • Support & Resistance
      • Trend Lines
      • Gaps and Gap Analysis
      • Introduction to Chart Patterns
      • Chart Patterns
        • Broadening Top or Megaphone Top
        • Double Top Reversal
        • Double Bottom Reversal
        • Head and Shoulders Top
        • Head and Shoulders Bottom
        • Falling Wedge
        • Rising Wedge
        • Rounding Bottom
        • Triple Top Reversal
        • Triple Bottom Reversal
        • Bump and Run Reversal
        • Flag, Pennant
        • Symmetrical Triangle
        • Ascending Triangle
        • Descending Triangle
        • Rectangle
        • Price Channel
        • Measured Move—Bullish
        • Measured Move—Bearish
        • Cup With Handle
      • Chart Types
        • Arms CandleVolume
        • CandleVolume
        • Elder Impulse System
        • EquiVolume
        • Heikin-Ashi Candlesticks
        • Kagi Charts
        • Renko Charts
        • Three Line Break Charts
        • MarketCarpets
        • Relative Rotation Graphs (RRG Charts)
        • Seasonality Charts
        • Yield Curve
      • Candlestick Charts
        • Introduction to Candlesticks
        • Candlesticks and Traditional Chart Analysis
        • Candlesticks and Support
        • Candlesticks and Resistance
        • Candlestick Bullish Reversal Patterns
        • Candlestick Bearish Reversal Patterns
        • Candlestick Pattern Dictionary
      • Point and Figure Charts
        • Point and Figure Basics
          • Introduction to Point & Figure Charts
          • Point & Figure Scaling and Timeframes
          • P&F Trend Lines
        • Classic Patterns
          • P&F Bullish Breakouts
          • P&F Bearish Breakdowns
          • P&F Signal Reversed
          • P&F Catapults
          • P&F Triangles
          • P&F Bull & Bear Traps
        • P&F Price Objectives
          • P&F Price Objectives: Breakout and Reversal Method
          • P&F Price Objectives: Horizontal Counts
          • P&F Price Objectives: Vertical Counts
        • Point & Figure Indicators
        • P&F Scans and Alerts
          • P&F Pattern Alerts
      • Chart Annotation Tools
        • Andrews' Pitchfork
        • Stock Market Cycles
        • Fibonacci Retracements
        • Fibonacci Arcs
        • Fibonacci Fans
        • Fibonacci Time Zones
        • Quadrant Lines
        • Raff Regression Channel
        • Speed Resistance Lines
    • Technical Indicators & Overlays
      • Introduction to Technical Indicators and Oscillators
      • Technical Indicators
        • Accumulation/Distribution Line
        • Alligator Indicator
        • Aroon
        • Aroon Oscillator
        • ATR Bands
        • ATR Trailing Stops
        • Average Directional Index (ADX)
        • Average True Range (ATR) and Average True Range Percent (ATRP)
        • Balance of Power (BOP)
        • Bollinger BandWidth
        • %B Indicator
        • Chaikin Money Flow (CMF)
        • Chaikin Oscillator
        • Chande Trend Meter (CTM)
        • CMB Composite Index
        • Commodity Channel Index (CCI)
        • ConnorsRSI
        • Coppock Curve
        • Correlation Coefficient
        • DecisionPoint Price Momentum Oscillator (PMO)
        • Detrended Price Oscillator (DPO)
        • Distance From Highs
        • Distance From Lows
        • Distance To Highs
        • Distance To Lows
        • Distance From Moving Average
        • Ease of Movement (EMV)
        • Force Index
        • Gopalakrishnan Range Index
        • High Low Bands
        • High Minus Low
        • Highest High Value
        • Linear Regression R2
        • Lowest Low Value
        • Mass Index
        • MACD (Moving Average Convergence/Divergence) Oscillator
        • MACD-Histogram
        • MACD-V
        • MACD-V Histogram
        • Median Price
        • Money Flow Index (MFI)
        • Negative Volume Index (NVI)
        • On Balance Volume (OBV)
        • Percentage Price Oscillator (PPO)
        • Percentage Volume Oscillator (PVO)
        • Performance Spread
        • Price Relative/Relative Strength
        • Pring's Know Sure Thing (KST)
        • Pring's Special K
        • Rate of Change (ROC)
        • Relative Strength Index (RSI)
        • Relative Volume (RVOL)
        • RRG Relative Strength
        • StockCharts Technical Rank
        • Slope
        • Standard Deviation (Volatility)
        • Stochastic Oscillator (Fast, Slow, and Full)
        • StochRSI
        • Traffic Light
        • TRIX
        • True Range
        • True Strength Index
        • TTM Squeeze
        • Typical Price
        • Ulcer Index
        • Ultimate Oscillator
        • Vortex Indicator
        • Weighted Close
        • Williams %R
      • Technical Overlays
        • Anchored VWAP
        • Bollinger Bands
        • Chandelier Exit
        • Double Exponential Moving Average (DEMA)
        • Hull Moving Average (HMA)
        • Ichimoku Cloud
        • Kaufman's Adaptive Moving Average (KAMA)
        • Keltner Channels
        • Linear Regression Forecast
        • Linear Regression Intercept
        • Moving Averages—Simple and Exponential
        • Moving Average Ribbon
        • Moving Average Envelopes
        • Parabolic SAR
        • Pivot Points
        • Price Channels
        • Triple Exponential Moving Average (TEMA)
        • Volume-by-Price
        • Volume-Weighted Average Price (VWAP)
        • ZigZag
    • Market Indicators
      • Introduction to Market Indicators
        • Market Indicator Dictionary
      • Advance-Decline Line
      • Advance-Decline Percent
      • Advance-Decline Volume Line
      • Advance-Decline Volume Percent
      • Arms Index (TRIN)
      • Bullish Percent Index (BPI)
      • DecisionPoint Intermediate-Term Breadth Momentum Oscillator (ITBM)
      • DecisionPoint Intermediate-Term Volume Momentum Oscillator (ITVM)
      • DecisionPoint Swenlin Trading Oscillator (STO)
      • High-Low Index
      • High-Low Percent
      • McClellan Oscillator
      • McClellan Summation Index
      • Net New 52-Week Highs
      • Percent Above Moving Average
      • Pring's Bottom Fisher
      • Pring's Diffusion Indicators
      • Pring's Inflation and Deflation Indexes
      • Pring's Net New High Indicators
      • Put/Call Ratio
      • Record High Percent
      • Volatility Indices
    • Market Analysis
      • Dow Theory
      • Sector Rotation Analysis
      • Intermarket Analysis
      • The DecisionPoint Chart Gallery
      • DecisionPoint Rydex Asset Analysis
      • Wyckoff Analysis Articles
        • Wyckoff Market Analysis
        • Wyckoff Stock Analysis
        • The Wyckoff Method: A Tutorial
      • Elliott Wave Analysis Articles
        • Introduction to Elliott Wave Theory
        • Identifying Elliott Wave Patterns
        • Guidelines for Applying Elliott Wave Theory
    • Trading Strategies & Models
      • DecisionPoint Trend Model
      • Trading Strategies
        • Bollinger Band Squeeze
        • CCI Correction
        • CVR3 VIX Market Timing
        • Faber's Sector Rotation Trading Strategy
        • Gap Trading Strategies
        • Harmonic Patterns
        • Hindenburg Omen
        • Ichimoku Cloud Trading Strategies
        • The 'Last' Stochastic Technique
        • MACD Zero-Line Crosses With Swing Points
        • Moving Average Trading Strategies
          • Finding Support and Resistance in Moving Averages
          • Guppy Multiple Moving Average: An MA Ribbon Designed to Tip the Market’s Hand
          • How To Trade Price-to-Moving Average Crossovers
          • Trading the Bounce: Finding Support and Resistance in Moving Averages
          • Trading the Death Cross
          • Trading Using the Golden Cross
          • Using the 5-8-13 EMA Crossover for Short-Term Trades
        • Moving Momentum
        • Narrow Range Day NR7
        • Percent Above 50-day SMA
        • Percent B Money Flow
        • The Pre-Holiday Effect
        • RSI(2)
        • Six-Month Cycle MACD
        • Slope Performance Trend
        • Stochastic Pop and Drop
        • Swing Charting
        • Trend Quantification and Asset Allocation
    • Index & Market Indicator Catalog
      • Advance-Decline Indicators
      • Cboe Indices and Indicators
      • CME Futures and Spot Prices
      • DecisionPoint Sentiment Indicators
      • Dow Jones Breadth Indicators
      • Dow Jones Global Indices
      • Dow Jones Select Indices
      • Dow Jones Titans Indices
      • Dow Jones US Indices
      • Economic Indicators
      • ICE Futures and Spot Prices
      • Intellidex Indices
      • MSCI Indices
      • New 52-week Highs and Lows for Exchanges
      • NYSE Arca Equity Indices
      • NYSE Equity Indices
      • Philadelphia Indices
      • S&P 500 Sector and Industry Groups
      • S&P GSCI Indices
      • StockCharts AD Percent
      • StockCharts AD Volume Percent
      • StockCharts Bullish Percent Index
      • StockCharts High-Low Index
      • StockCharts High-Low Percent
      • StockCharts Percent Above Moving Average
      • StockCharts Pseudo Symbols
      • StockCharts Record High Percent
      • StockCharts Theoretical Indices
      • US Treasury Yields
    • 📖Glossary
      • 📖Glossary - A
      • 📖Glossary - B
      • 📖Glossary - C
      • 📖Glossary - D
      • 📖Glossary - E
      • 📖Glossary - F
      • 📖Glossary - G
      • 📖Glossary - H
      • 📖Glossary - I
      • 📖Glossary - J
      • 📖Glossary - K
      • 📖Glossary - L
      • 📖Glossary - M
      • 📖Glossary - N
      • 📖Glossary - O
      • 📖Glossary - P
      • 📖Glossary - Q
      • 📖Glossary - R
      • 📖Glossary - S
      • 📖Glossary - T
      • 📖Glossary - U
      • 📖Glossary - V
      • 📖Glossary - W
      • 📖Glossary - X, Y, Z
    • Options Glossary
    • Educational Resources
Powered by GitBook
LogoLogo

ON STOCKCHARTS

  • Charts & Tools
  • Articles
  • StockCharts TV
  • ChartSchool

MEMBERS

  • Your Dashboard
  • Your ChartLists
  • Advanced Scans
  • Technical Alerts

HELP

  • Support Center
  • FAQs
  • Contact Us
  • Pricing

COMPANY

  • About Us
  • What's New
  • Careers
  • StockCharts Store

© StockCharts.com, Inc. All Rights Reserved.

On this page
  • What Is the Advance-Decline Volume Line?
  • How Do You Calculate the Advance-Decline Volume Line?
  • How Do You Read the Advance-Decline Volume Line?
  • Bullish Divergence
  • Bearish Divergence
  • Large-Cap Bias
  • The Bottom Line
  • SharpCharts
  • Symbol List
  • FAQs Advance-Decline Volume Line

Was this helpful?

Export as PDF
  1. Table of Contents
  2. Market Indicators

Advance-Decline Volume Line

A cumulative breadth indicator derived from Net Advancing Volume.

PreviousAdvance-Decline PercentNextAdvance-Decline Volume Percent

Last updated 11 months ago

Was this helpful?

What Is the Advance-Decline Volume Line?

The Advance-Decline Volume Line (AD Volume Line) is a breadth indicator based on Net Advancing Volume, which is the volume of advancing stocks less the volume of declining stocks. Net Advancing Volume is positive when advancing volume exceeds declining volume and negative when declining volume exceeds advancing volume.

The AD Volume Line is a cumulative measure of Net Advancing Volume, rising when Net Advancing Volume is positive and falling when it is negative. Chartists plot the AD Volume Line for a specific index and compare it to the performance of that index. The AD Volume Line should confirm an advance or decline with similar movements. or in the AD Volume Line signal a change in buying or selling pressure that could foreshadow a reversal in the index.

How Do You Calculate the Advance-Decline Volume Line?

AD Volume Line (previous value) + Net Advancing Volume (current value)

As a cumulative indicator, the AD Volume Line is a running total of each period's Net Advancing Volume. The actual value of the AD Volume Line depends on the starting point for the calculation. Since it has to start somewhere, the first calculation for the AD Volume Line is simply Net Advancing Volume for one period. The next value is the AD Volume Line value for the previous period plus Net Advancing Volume for the current period.

The example above shows the AD Volume Line calculation for 25 days beginning on January 19th, 2010. The first value is simply Net Advancing Volume for that day (+1144). Net Advancing Volume for the second day (January 20th) was negative (-1150), so the AD Volume Line fell to -6 (+1144 + -1150 = -6).

Even though the actual value of the AD Volume Line would be different if we began in January 2009, the shape of the line for this calculation period would be exactly the same. It simply rises and falls as Net Advancing Volume rises and falls. The shape and direction of the AD Volume Line are important, not the actual value. Chartists can click the link below this image to see the SharpChart settings used to create this indicator.

How Do You Read the Advance-Decline Volume Line?

Because it is based on volume, the AD Volume Line measures the buying and selling pressure behind an advance or a decline. The volume behind advancing stocks represents buying pressure, while the volume behind declining stocks represents selling pressure.

An AD Volume Line that rises and records new highs along with the underlying index shows strong buying pressure. This is bullish. An AD Volume Line that fails to keep up with the underlying index and fails to confirm new highs reflects weakness in buying pressure. Market strength is undermined when buying pressure fails to confirm an advance. Weakness in buying pressure can be identified with a bearish divergence between the AD Volume Line and the underlying index.

On the downside, the market is considered weak when the AD Volume Line moves to new lows along with the underlying index. This shows strong selling pressure. A bullish divergence forms when the AD Volume Line fails to record a lower low along with the index. This means selling pressure is waning and the decline may be nearing an end.

Bullish Divergence

Chart 2 shows a bullish divergence in the Nasdaq AD Volume Line. Because the Nasdaq AD Volume Line is based on the advance-decline volume statistics from the Nasdaq, it makes sense to compare its performance to the Nasdaq Composite. A bullish divergence formed in January-February 2010 when the Nasdaq moved below its January low, but the Nasdaq AD Volume Line formed a higher low. This bullish divergence showed less selling pressure as the Nasdaq forged a lower low. Even though this bullish divergence is rather small and only encompasses a few weeks, it foreshadowed an important low in February 2010. The Nasdaq subsequently advanced over 10% from its February low to its April high.

Bearish Divergence

As noted above, basic chart analysis can be applied to the AD Volume Line. A moving average can be overlaid on the indicator to identify upturns and downturns. Chartists can also use the AD Volume Line to confirm support or resistance breaks in the underlying index. The AD Volume Line and the Nasdaq bounced from late November to late December. Both moved step-for-step during this period and broke support in early January. The support break in the AD Volume Line showed a notable increase in selling pressure and confirmed the support break in the Nasdaq.

Large-Cap Bias

The advance-decline volume statistics favor large-cap stocks over small-cap and mid-cap stocks. Thousands of stocks trade on the Nasdaq and NYSE daily; most are small- and mid-caps, and relatively few are large-caps. Despite fewer large caps, the largest companies account for the most volume. Large caps such as Alphabet, Inc. (GOOGL), Amazon.com, Inc. (AMZN), Apple, Inc. (AAPL), NVIDIA Corp. (NVDA), Meta Platforms, Inc. (META), and Microsoft, Inc. (MSFT) regularly appear on the most active list. Small stocks occasionally make it, but large caps still dominate volume. For example, NVIDIA averages over 50 million shares per day. On the other hand, a small-cap stock like Super Micro Computer, Inc. (SMCI) averages just over 3 million shares per day. An advance in NVIDIA adds some 50 million shares to Net Advancing Volume, while an advance in SMCI will add just 3 million shares. It takes a lot of SMCIs to make up for one Alphabet. You'll find a similar logic in the NYSE.

While the Nasdaq AD Line has a long-term downward bias, the AD Volume Line does not share this characteristic. Nasdaq listing requirements are not as strict as NYSE listing requirements. As a result, the Nasdaq is full of upstarts in industries ranging from biotech to technology to alternative energy. Even though more Nasdaq stocks are prone to failure, these failures are usually small-caps. The negative impact on the AD Volume Line is minimal because large caps drive the AD Volume Line. In contrast to small-caps and mid-caps, large-caps are much less likely to go out of business or fail to meet listing requirements on the Nasdaq. There will, however, be a few exceptions along the way.

The Bottom Line

The AD Volume Line is a breadth indicator that reflects buying and selling pressure in large-caps, which are the volume leaders on the major exchanges. A rise in the AD Volume Line shows more money flowing into advancing stocks than declining stocks. This also provides a means to quantify total volume. While an advance on relatively low volume may appear weak, looking at Net Advancing Volume and the AD Volume Line may prove otherwise. Total volume is important, but the balance of volume is more important. Net Advancing Volume shows when more money moves into stocks (buying pressure) or out of stocks (selling pressure).


SharpCharts

Symbol List

FAQs Advance-Decline Volume Line

Why does the AD Volume Line favor large-cap stocks?

The AD Volume Line favors large-cap stocks as they account for the most volume in major exchanges, affecting Net Advancing Volume more significantly than small- and mid-caps.

How does AD Volume Line help in analyzing market conditions?

The AD Volume Line provides insights into the buying and selling pressure behind market advances or declines, helping you identify internal strengths or weaknesses in the market.

Can the AD Volume Line signal market reversals?

Yes, bullish or bearish divergences in the AD Volume Line can signal a change in buying or selling pressure, potentially foreshadowing a reversal in the index.

Can I apply basic chart analysis to the AD Volume Line?

Yes, basic chart analysis can be applied to the AD Volume Line, including using moving averages and identifying support or resistance breaks.

Can the AD Volume Line confirm support or resistance breaks in the underlying index?

Yes, the AD Volume Line can be used to confirm support or resistance breaks in the underlying index, enhancing the robustness of market analysis.

Once the Nasdaq moved below its January low and the AD Volume Line was still above its January low, the possibility of a bullish divergence surfaced. This possibility served as an alert to watch for a potential bullish reversal in the Nasdaq because the AD Volume Line showed less selling pressure. Some other form of technical analysis is then needed to confirm the higher low in the AD Volume Line and signal an upturn. Normal chart analysis can be applied to the AD Volume Line. Notice how the AD Volume Line broke a few days ahead of the Nasdaq. This breakout signaled a trend reversal in the AD Volume Line and the Nasdaq followed a few days later.

Chart 3 shows a bearish divergence in the Nasdaq AD Volume Line in October 2007. The AD Volume Line peaked in early October, but the Nasdaq forged a higher high in late October. The lower high in the AD Volume Line showed weakness in buying pressure as the Nasdaq moved to a new high for the move. Weak buying pressure gave way to increased selling pressure that pushed the Nasdaq lower in November. Notice that the AD Volume Line broke support a day before the Nasdaq broke its corresponding .

The AD Volume Line can be created on SharpCharts for the Amex, Vancouver, Nasdaq, NYSE or Toronto stock exchanges. A list of symbols for Net Advancing Volume can be found below the chart. First, enter the symbol for Net Advancing Volume. Second, change the chart “type” to “” and click “update” to create the AD Volume Line. A solid 1-day was added to better highlight the AD Volume Line.

SharpCharts users can also add the underlying index by selecting “price” as an indicator and entering the index symbol in the “parameters” box. Net Advancing Volume is also shown as a separate indicator in histogram format to see the daily fluctuations. for a live example.

StockCharts.com users can access up-to-date lists of symbols for our and . Both indicators can be used to create AD Volume Lines. From these lists, click the “Mentions” icon to the right of a specific symbol for more details about the symbol and recent mentions in Public ChartLists, blog articles, and more.

Click here for a live version of the chart.
Click here for a live version of this chart.
Click here for a live version of this chart.
Click here for a live version of this chart.
Click here for a live version of this chart.
Click here
Advance-Decline Volume Indicators
Advance-Decline Volume Percent Indicators
moving average
support level
Bullish
bearish divergences
resistance
cumulative