Absolute breadth index

Advance Decline group - Absolute Breadth Index

Absolute Breadth Index (ABI) - Definition of Absolute Breadth Index (ABI) on Investopedia - A market indicator used to determine volatility levels. Advance Decline of the group-based indicators with focus on the market breadth is in combination with other methods may have a very profitable approach to the analysis. The Absolute Breadth Index is one of very many market breadth indicators. In the center of attention is the ratio between those rates, which rose within a certain period and those who have fallen.

Advance Decline Indicators employ special trade flow statistics using information collected about the number of increases, the fallen and the unchanged values. Also included in the analysis, the corresponding trading volume.

The absolute breadth index (ABI) is a momentum indicator measuring the amount of volatility on the New York Stock Exchange. The variable adADV stands for the number of rising, fell for the adDEC adUCG and closed unchanged for the values ​​in a market or index. Accordingly, the volume of all known adVolADV increased, the volume of fallen adVolDEC adVolUCG and the volume of all closed unchanged values ​​in a market or index.


Absolute Breadth Index by Steven B Achelis, learn more about technical analysis by reading our exhaustive free reference. To determine the indicator a simple subtraction is performed, the number of fallen values ​​is subtracted from the number of rising, the indicator value itself is always positive, since it is the absolute value of the result. Technically, the whole formula looks like this:

breadthIndex (t) = Abs (adADV (t) - adDEC (t))

The practical utility of the Absolute Breadth Index is seen primarily in the activity monitoring, extremely short-term market fluctuations can be analyzed quite well: For example, if rising prices recorded and the indicator shows a high value, it means that a lot of index components contributed to the increase have. Low indicator values ​​with rising prices have however pointed out that only a small number of constituents have caused the price increase. The interpretation of falling prices and low or high indicator value is the same.

A modification of the described indicator is created by summing the respective indicator values ​​over the accounting period. The resulting Absolute Breadth Summation index can be regarded as support for the analysis of medium-term trends. Following the basic assumption that a healthy trend is characterized by the fact that many index members are involved in it, an opposite scenario may be interpreted as signs of a possible trend change.