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Volume Role in Advance/Decline Analysis
(Indicators based on the "advances" and "declines" concept)
Description: Advance/Decline technical analysis of volume and issues, breadth indicators, technical analysis of the S&P 500 index charts, advances/declines and advancing and declining volume.
Bellow you may see some quotes from the "Advance Decline Volume and Issues" article published on MarketVolume's website which explains on the example how issues and volume could be analyzed together:
"...If you were to analyze the S&P 500
index at the end of a trading day, you found that 400 stocks were in the
group of advancing issues and only 100 stocks in the group of declining
issues, you could say that market sentiment during the day that had just
elapsed was positive...
... upon closer inspection of the volume
data associated with the advancing and declining groups, you might
discover that the advances volume was 600,000,000 shares, while the
declines volume amounted to 400,000,000 shares. From this data, you
could make the determination that the "bullish trend" was not as strong
as you first believed...
...Let us apply our two indicators to the
S&P 500 index over a 5-day period (see Chart 1 below).
Chart 1.
Advancing and Declining (AD) Issues and AD
Volume.
S&P 500 Index. 5-day Intraday (One Bar = 15 minutes)
Table 1. Advancing and Declining (AD) Issues and AD Volume. End-of-day data. S&P 500 Index. August 20, 2004 to August 26, 2004.
| Date | S&P 500 Change from previous close |
Advancing Issues |
Declining Issues |
% Advancing Issues |
Advanced Volume |
Declined Volume |
| 08/20/2004 | +0.65% | 420 | 75 | 84.0% | 985 M | 331 M |
| 08/23/2004 | -0.24% | 169 | 323 | 33.8% | 578 M | 570 M |
| 08/24/2004 | +0.04% | 278 | 213 | 55.6% | 515 M | 657 M |
| 08/25/2004 | +0.80% | 402 | 91 | 80.4% | 1,122 M | 216 M |
| 08/26/2004 | +0.01% | 256 | 234 | 51.2% | 472 M | 668M |
...In summary, we can say that
during these 5 days, market breadth was positive and the uptrend
remained "healthy"...
...As you can see,
volume data helps you gain a more accurate view of market activity.
If you are already applying the AD issues indicator to your analysis, it
is certainly a good idea to add the AD volume indicator as well."
Volume will make your analysis more accurate and more reliable.
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Copyright 2004 Highlight Investments Group. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Tags: technical analysis, declines, advances, S&P 500 chart, indicator, S&P 500, Volume, Advance/Decline
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