24 basic indicators (24)-ADL

Teng Fu indicator-ADL

The ADL index is also called the flat index or the UPS/downs index. Its full name is "advance decline" and its short name is ADL. It is a technical analysis tool dedicated to studying stock index trends.

Section 1 principles and calculation methods of ADL indicators

I. Principles of ADL indicators

The ADL index is calculated and observed based on the number of stocks that increase and fall every day, so as to understand the rise and fall of the Stock Market popularity, and detect whether the internal momentum of the trend is strong or weak, in this way, we can determine the technical indexes of future stock market trends. It is the sum of the total number of stocks that will be listed and traded in the city's market, the number of stocks that increase every day minus the number of stocks that fall. The first day of the rise in the number of stocks minus the second day of the rise in the number of homes to get the difference is the first day of ADL, the second day is also the rise in the number of stocks minus the decline in the number of homes, then, sum the obtained difference to the ADL value of the first day, and the accumulated amount is the ADL value of the next day, and so on. Therefore, we can know that the ADL index is the cumulative result of using simple addition and subtraction to calculate the number of stocks rising and falling every day. It is compared with the comprehensive index of the stock market trend, forecast the future of the stock trend.
Under normal circumstances, the stock market trend index is rising, and the number of stocks to rise is bound to be large. On the contrary, the stock market trend index is falling, and the number of stocks to fall is large. The relationship between the two is often proportional, and the rise and fall of the stock market trend is the same as the strength of the market's popularity. However, when the stock market trend index is close to a high or low position, exceptions often occur. This is mainly because the calculation of the stock market trend index is generally based on the stock market trend and the size of the total share capital, this makes the market's high-price shares and the stock with a large circulation disk (that is, index stocks or sub-shares), the rise or fall in the proportion of the index calculation is very heavy, this has a significant impact on the rise and fall of the index. The main force in the market often uses the characteristics of stocks with large shares or large stock markets to effectively control the market in order to attract the interest of buyers or to lure sellers into selling, deliberately pull up or suppress index stocks, thus indirectly affecting the rise and fall of the market trend.
The ADL indicators are similar to the stock market trend index, both of which reflect the trend and trend of the trend and do not provide a signal for the rise or fall of individual stocks. However, because the stock market trend index is affected by the index stocks under certain circumstances, the abnormal trend of these stocks (sudden increase or collapse) will have an impact on the trend of the stock market trend index, so as to provide investors with untrue information. In order to make up for the shortcomings of the stock market trend index which may be distorted, we have introduced an index to analyze the Stock Market Trend Index to assist in the determination of the stock market trend index.
The ADL indicator is a big trend indicator that determines the number of individual stocks that increase or fall. Because the calculation method is the difference between the increase and decrease in the number of individual stocks traded in the accumulative market, only the index has the ADL index value, this indicator is not available for individual stocks. The ADL index is easy to calculate and has simple principles. It has a unique function for observing the actual popularity of the dashboard.

Ii. Calculation of ADL indicators

The Calculation of ADL indicators is relatively simple. Daily ADL is the cumulative difference between the total number of stocks that increase daily and the total number of stocks that fall. Generally, to accurately reflect the trend of the trend, the cumulative ADL value for a period of time is the daily ADL value. The specific process is as follows:
Assume that the ADL value of the previous trading day is known, and then the ADL value of the current day is calculated.
If the total number of shares on the day is a, the total number of shares is B, and the decline is B, the standard here is to compare the closing price of the day with the previous day's closing price. The formula for calculating the daily ADL value is
Daily ADL = previous day ADL + A-F
Launched from above:
Daily ADL = Σ A-Σ F
In formula, Σ A indicates the sum of the number of sellers on each trading day starting from the first day of the transaction.
Σ F indicates the sum of the number of sellers on each trading day starting from the first day of the transaction.
It should be emphasized that, unlike other indicators, ADL indicators do not have weekly ADL indicators, monthly ADL indicators, annual ADL indicators, or various types of indicators such as minute-level ADL indicators, it only has daily ADL. In practical use, due to the increasing popularity of stock market analysis software, daily ADL value calculation is quickly completed by computers, and investors do not need to manually calculate the ADL value, it is mainly to understand the calculation principles and methods of daily ADL, so as to be familiar with various analysis methods and skills of ADL indicators.

Section 2 General Evaluation Criteria for ADL indicators

Unlike other technical indicators, in general, ADL indicators can only be used for the trend of the dashboard, not for individual stock analysis, but also for the daily trend of the dashboard.
The Application of ADL focuses on the trend of its curve and does not focus on the value size. The general evaluation criteria of ADL indicators are mainly focused on the use of the synchronization trend and the opposite trend of the ADL curve and the stock market trend index curve.

I. synchronization between the ADL curve and the stock market trend index curve

1. When the ADL curve and the stock market trend index curve rise synchronously and reach a new height, it can be determined that the upward trend of the general trend will continue. The general trend is unlikely to reverse downward in the short term.
2. the ADL curve and the stock market trend index curve fall synchronously, and the innovation is low, it can be judged that the downward trend of the general trend will continue, the general trend is unlikely to reverse in the short term.
3. In the long-rising multi-headed market, when the ADL curve shows a long-term upward trend, if a sudden sharp decline occurs, then immediately turn around and go up, hitting a new high, at the same time, when the stock market trend index curve is similar, it indicates that the power of multiple parties is very strong, and the market may go up again, hitting a new high.
4. In the long-falling short market, when the ADL curve shows a long-falling trend, if the phenomenon suddenly rises rapidly, then immediately turn around and go down, and set a new low, at the same time, when the stock market trend index curve is similar, it means that the air is very powerful, and the market may go down again, hitting a new low.

Ii. opposite trend between the ADL curve and the stock market trend index curve

1. In the long-rising multi-headed market, if the stock market trend index has entered a high position, and the ADL curve does not rise at the same time, it begins to flatten or drop, this is a signal that the upward trend of the general trend may end.
2. In the long-falling short market, if the stock market trend index has already entered a low position, and the ADL curve does not fall synchronously, it starts to flatten or turn to rise, this is a signal that the downward trend of the general trend may come to an end.
3. The stock market trend index fell from its high point and then rose again. It is close to its early high point or new high, but its ADL curve is stuck or cannot rush over its early high point, this indicates that the trend may be reversed at any time.
4. The stock market trend index rebounded from a low point and fell again after the rebound. It is close to the low point in the early stage or the low level of innovation, but the ADL Curve cannot fall below the low point in the early stage and go straight or up and turn around, it indicates that the overall decline may have changed and may rebound upwards at any time.

Section 3 Special Analysis Methods of ADL indicators

The special analysis methods of ADL indicators are mainly focused on the deviation of ADL curves and the relationship between the ADL curves of the day and the average ADL of the day.

I. Deviation of ADL indicators

1. Top Deviation
In the multi-headed market, the main force often controls the trend of some index stocks to maintain the rising trend of the market and attract buyers and increase shipments. The rising trend of the stock market will be very stable when the market's main force uses the index stocks to keep up the confidence of medium-and long-term investors and continues to rise at the rising pace of other stocks. When the multi-headed market continued for several months, the stock market trend index was still slowly rising, while the Dal index was at a high position and even began to decline, it indicates that the rising trend of the stock market trend index is mainly caused by the rise of index stocks. Other stocks are not supported, and the market force shows signs of high shipment. This trend is the top deviation of ADL indicators. When the top deviation of the ADL index occurs, it usually means that the stock market's multi-headed market is nearing the end, and the stock market trend may soon reverse down.
2. Bottom Deviation
In the bear market, the main force often also controls the trend of some index stocks to extend the market's downward trend and achieve the goal of forcing sellers to sell and suck at low prices. Early in the fall of the stock market, the popularity of the market dispersed, investors are competing to sell the stock at hand, the decline of the stock market trend is a wave of lower. When the short market continued for several months, as the sales volume gradually reduced, the transaction volume shrank sharply, and the market showed signs of stock renewal. Many stocks began to fall steadily, at this time, the market force did not collect enough cheap chips. In order to have enough space and time to absorb the outstanding stocks at a low price, the market force will use the control index stocks to drop down again to combat the confidence of medium-and long-term investors. When the stock market trend index fell again and its innovation was low, while the Dal index fell below or even started to increase, this indicates that the decline trend of the stock market trend was mainly due to the suppression of index stocks by the market's main force, in order to achieve the goal of low prices. This trend is the bottom deviation of ADL indicators. When the ADL indicators deviate from the bottom, it usually means that the market's main force has begun to enter the warehouse, and the market will soon stop falling.

Ii. Shape of ADL Curves

Like other technical analysis indicators, the various forms of ADL curves are also an analysis method for judging the market trend and determining the buying and selling opportunities.
1. When the ADL curve forms the M-headed or triple-peaked top reversal form at a high level, it may indicate that the stock market trend has changed from strong to weak, and the stock market trend is about to fall sharply, so it is necessary to sell the stock in time. If the trend of the stock market shows the same pattern, it can be confirmed that the decline can be determined by M-headed or triplicate theory.
2. When the ADL curve shows a bottom-W or a bottom-heavy reverse pattern at a low position, it may indicate that the stock market trend is changed from weak to strong, and the stock market trend is about to rebound upwards, so that a small amount of shares can be absorbed at the low position. If the trend of the stock market shows the same pattern, the increase can be determined by the theory of bottom W or bottom three.
3. The accuracy of M header and triple top shape in the ADL curve is higher than that in W bottom and triple bottom.
Iii. Relationship between ADL and Ma lines
1. After the ADL curve and the MA curve are sorted at the bottom for a long period of time, the ADL curve starts to run upwards, and the MA curve also scales or increases slightly, it indicates that the overall upward momentum of the stock market trend is increasing, and the long-term upward movement trend of the stock market trend is initially formed. Investors can start to absorb the stock at an bargain.
2. When the ADL curve begins to break through the MA curve, it indicates that the momentum of the stock market trend has been quite sufficient, and the long-term upward trend of the stock market trend has been formed, if a large volume of transaction volume is used together, investors should firmly purchase the entire warehouse to receive a strong rise.
3. When the ADL curve breaks through the MA curve and runs for a period of time, it starts to callback downward and approaches or touch the MA curve. As long as the ADL curve does not effectively fall below the MA curve, all indicate that the stock market trend is a strong sort. Once the ADL curve is turned back again, it indicates that the momentum of the stock market trend is gathering again, and the stock market trend will enter the strong growth stage. Investors can promptly buy low-end stocks or hold shares to rise.
4. When the ADL curve and the MA curve expand upwards at the same time, it indicates that the stock market trend is still strong. Investors can hold strong stocks all the way or buy stocks in the initial low position.
5. When the ADL curve and the MA curve run up for a long period of time at the same time, because the ADL curve runs fast and thus far away from the MA curve, once the ADL curve turns down, it indicates that the short-term kinetic energy consumption of the stock market trend is relatively large, and the stock market trend has a short-term callback requirement. Investors should sell stocks that have increased too much in the short-term.
6. When the ADL curve turns from high to downward, it indicates that the rising momentum of the stock market trend has been exhausted, and the decreasing momentum begins to accumulate, the medium-term upward trend of the stock market trend has ended, and the medium-term downward trend has begun to take shape. Investors should sell stocks in a timely manner.
7. When the ADL curve runs down from a high position and breaks down the MA curve, the MA curve also begins to run downward, indicating that the strong rise of the stock market trend has ended, the long-term downward trend of the stock market trend is becoming increasingly apparent. Investors should firmly hold the currency and watch or sell the remaining shares at rallies.
8. When the ADL curve keeps running downward below the MA curve, it indicates that the weakness of the stock market trend is extremely obvious. The only investment decision that investors can take is to hold the currency and wait and see.
9. When the ADL curve runs below the MA curve for a long time and slowly turns around, it indicates that the decline momentum of the stock market trend is temporarily slowing down, and the stock market trend is in a weak arrangement, investors should continue to observe and not take actions easily.
10. When the ADL curve begins to break above the MA curve below the MA curve, it indicates that the rebound momentum of the stock market trend is increasing and the stock market trend will stop falling, investors can buy a small number of strong stocks to make a short-term rebound, but do not have to fight, once the market goes down again, immediately leave the market to wait and see, until the stock market trend for long-term decline began to form.
11. When the ADL curve and the MA curve are always intertwined and horizontally moving in a space with little fluctuation up or down, it indicates that the stock market trend is in a long-term horizontal layout, investors should also focus on wait-and-see.