Legal Definitions - advance-decline index

An advance-decline index is a type of stock-market indicator that shows the cumulative net difference between stock-price advances and declines. It is a number, usually expressed as a percentage or ratio, that measures the performance of a series of observations, especially those involving the stock market or the economy.

For example, if there are 100 stocks being tracked and 60 of them have increased in price while 40 have decreased, the advance-decline index would be +20 (60-40). This indicates that the market is performing well overall, as more stocks are increasing in value than decreasing.

The advance-decline index is important because it provides insight into the overall health of the stock market. By tracking the number of advancing stocks versus declining stocks, investors can get a sense of whether the market is bullish (more stocks are increasing in value) or bearish (more stocks are decreasing in value).