Tests of Breadth
To understand the behavior of resistance and support, a starting point may be the analysis of advances and declines in the market as a whole. This is most useful for comparing the behavior of an individual stock in comparison to the larger market.
Key Point
The A/D line for individual stocks is more reliable than weighted index trends. It focuses on one stock rather than on a group of stocks.
The advance-decline (A/D) line is a measurement of all stocks on an exchange. This offsets the tendency for weighted index influence from a few issues, and it provides what may be a more realistic view of how the market is behaving and how an individual stock is likely to follow suit with the market itself. This line is a cumulative ...
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