The advance-decline ratio compares the number of rising stocks to falling ones each day. Here's how to interpret it, when divergences signal danger, and how to use it alongside other breadth tools.
Every trading day, thousands of stocks go up, down, or sideways. The advance-decline (A/D) ratio summarises that activity into a single number: the count of stocks that advanced divided by those that declined. A ratio above 1 means more stocks rose than fell; below 1 means the reverse.
The basic calculation is straightforward:
A/D Ratio = Advancing stocks ÷ Declining stocks
For example, if 2,500 stocks advanced and 1,000 declined on a given day, the ratio is 2.5. That's a strong breadth day. If only 800 advanced while 2,200 declined, the ratio is 0.36 — a weak, broadly negative tape regardless of where the index closed.
Trading Awareness tracks the 1-day, 5-day (rolling), and 10-day A/D ratios across the full US universe, applying the same $3 price and 100k average volume filter used for all other breadth metrics.
Bearish divergence: The index grinds to a new high, but the A/D ratio has been quietly declining over the same period. Fewer stocks are participating in each successive new high — a classic warning sign of a narrowing rally that often precedes a reversal.
Bullish divergence: The index is making lower lows, but the A/D ratio has been improving — more stocks are holding up than you'd expect. This can signal a coming recovery before the index confirms it.
The A/D ratio captures whether more stocks rose than fell — but a stock that gained 0.1% counts the same as one that gained 8%. Combining the A/D ratio with the 4%+ move count gives a fuller picture:
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