Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

AD-line and the mystery

20 sec read


 
What the hell behind the adline which keeps on decling continiously for more than a year in this rising market? If you check the nse stock most of them are either moving sideways or trending downwards only the nifty 50 pack is moving up rest are still in the silent mode. What could be a possible reason for this kind of action. Defenitely it doesnt sounds like euphoria in the market. But market is moving upside in rotational trading fashion. Kindly provide your comments on these. Would like to learn more from you.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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7 Replies to “AD-line and the mystery”

  1. I also have been pondering over this for a long. I do not know how they are calculating this. But certainly this paints a much more bleaker picture than it is actually out there. How else can we have a -15000 value, there are I guess 2000 stocks that are traded in Nifty.

    Ideal “Advance – Decline” graph with some kind of moving average smoothing.

  2. @Tarique – may be you had mistaken the above chart to advance-decline ratio.. actually it is a advance decline line just a variation of ad ratio and the formula is

    A/D Line = (No of Advancing Stocks – No of Declining Stocks) + Yesterday’s A/D Line Value

    A/D line will turn to negative if more than 50% of stocks are decreasing. Assume that out of 2000 stocks 925 stocks are advancing and 1075 stocks are declining continiously for a prolonged period and the current Adline value is zero. Then total advancing issues are (-150). So -15000 is possible in just 100 days after the adline declines to zero

    As per Investopedia

    The A/D line can be used alone or together with the price chart to look for divergences. A divergence suggests that a move in the price chart is unsupported by the broad market, and it should, therefore, be taken as a warning of an impending turning point in the index or market.

  3. nice one. One day power sector.another day FMCG sector like that it is being rotated. Any body has a clue which stock will go out of nifty bag when coal India come.

    Is it possible sector wise A/D with nifty/other indexes to know the things in better.

    Further over the year the days on which particular sector rises and after that how many days take for that to raise and in that which stocks they are giving boost and that days taken by rotation

    Thanks

    Bala

  4. I guess that investors, including FII’s, are preparing to sell their profit-making shares now and will use that amount for IPO subscription of coal India. They might have made max. profit in nse stocks.

  5. Nice pictorial…

    The current picture clearly points to the fact that instead of this being a secular move, the upside is getting thinner ans thinner in participation and therefore lacking strength.

    What this could also mean that in case of a viable trading strategy, its is getting more of an opportunity to buy the side-counters (quality midcaps) and sell the heavyweights, and then wait for the market to react. Either the midcaps should outperform or the heavyweights should correct sharper, thereby providing opportunity on both the counts.
    Lastly, a divergence like this does not augur well as the strength of the move, and therefore, may provide for a reasonable sharp opportunity, most probably on the short side. Till then keep your fishing nets on and wait for the right Opportunity !!!

    Tejas Nandu

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