The Advance-Decline Line is a market breadth indicator and should be compared to the other market indices like the Dow Jones or S&P 500. Daily or weekly NYSE data is used in the calculation. Because the Advance-Decline Line reflects the action of the general market, any divergences are watched closely by market technicians. As long as the Dow and the Advance-Decline Line are moving in the same direction the trend will continue. If the Dow makes a new high which is not confirmed by a high of the Advance-Decline Line, caution is warranted. Vice versa, if the Dow makes a. | The E-Book of Technical Market Indicators by Wall Street Courier office@ 1 The E-Book of Technical Market Indicators Preface The transparency of the American markets offers an array of indicators and allows deep insights of prevailing sentiment. You find the activities of NYSE members like specialists and floor traders public and odd lot short sales the Short Interest Ratio as well as the large block transactions of the institutional investors published every week. Other tools for technical analysis include trend indicators daily advances and declines daily new highs and lows volume indices put call ratios and other useful information like Stochastics RSI MACD TICK and more. The problem is only that all these indicators contradict each other most of the time. Countless books have been written on this subject and no matter how many will be written in the future always be aware that there is no such thing as the Holy Grail of the stock market. But some people are more successful than others and the answer is quite simple No indicator is right all the time and you don t have to be right all the time. Just be right a higher percentage of the time than wrong. Choose some reliable indicators and stick to them. Don t follow some indicators for a while and switch to some others if they fail. Don t be a technician in the first half of the year and a fundamentalist the next half. Be consistent and disciplined in your approach. Don t abandon a good indicator because you think this time everything is different. It takes of course a lot of guts because the opinions of the most widely quoted gurus of Wall Street are usually contrary to your indicators at that time. This is much easier if you don t use margin. You will sleep a lot better if you buy fifty shares of IBM with the money you can spare than two hundred shares on credit. Happy Trading Wall Street Courier Page 2 The E-Book
