Advance-decline ratio (%) = total number of advancing issues over the period ÷ total number of declining issues × 100
What the Indicator Shows
Rather than looking at an individual stock, this ratio is calculated by tallying the number of advancing and declining issues across an entire market, such as the TSE Prime Market. A 25-day aggregate is commonly used, and a higher reading indicates that more issues are advancing and that the market overall is leaning bullish.
How to Read It, and What to Watch Out For
As a rough guideline, readings above about 120% are sometimes described as "overbought" and readings below about 70% as "oversold," but this is merely a rule of thumb based on past observation, not an absolute trading signal. Depending on the market phase, the market can continue trading at those levels for an extended period, so it is common to use this indicator alongside others.