Five things you can infer from advance-decline ratio

Normally, when the A/D ratio moves from positive to negative territory it is the first lead indicator of the market likely to correct.

One of the popular measures or ratios used to gauge the strength of the stock market is the Advance/Declines ratio or simply the A/D ratio. The A/D ratio is the ratio of the number of shares that advanced to the number of shares that declined. The extent of decline or rise in the stock price is not taken into consideration. On a particular trading day, if 1,300 stocks advanced, 1,100 stocks declined and 150 stocks were constant, then you can interpret the A/D ratio as 1300/1100 = 1.18. The table below captures the A/D ratio on a longer term basis