24 basic indicators (22)-ADR

Increase/decrease ratio index-ADR

The ADR index is also called the increase/decrease ratio index. Its full name is "advance decline ratio ". Like ADL indicators, it is a medium-and long-term technical analysis tool dedicated to studying stock index trends.

Section 1 principles and calculation methods of ADR indicators

I. Principles of ADR indicators

The rise/fall ratio (ADR) Index compares the increase and decrease of all stocks listed and traded in a certain period of time, determine the ratio between rise and fall, and infer the changes between the many empty forces in the market, and then determine the actual situation in the market. Due to the relationship with ADL indicators, ADR indicators are also called regression index. This indicator integrates the Rise and Fall information of individual stocks in the stock market, which reflects the trend of the stock market, but does not show the specific strength of individual stocks. Therefore, it is the same as ADL, it is the same as a specialized large-scale indicator, which is specialized in Stock Index Research, and cannot be used for stock Stock selection and research.
The stock market is a battlefield where both sides fight. This battle is spontaneous to a certain extent, with a lot of freedom and blindness, it is manifested in a serious situation of overbuy and oversell in the stock market. Sometimes investors blindly chase up and lead to overbuy in the stock market, and sometimes blindly kill and lead to overselling in the stock market. The ADR index reflects from one side whether the entire stock market is in a situation where the stock market is experiencing excessive ups and downs and the phenomenon of overbought and oversold is serious, so as to carry out rational investment operations.
The structure of the ADR index is based on the "pendulum principle", that is, when one side is too powerful, it will produce a very powerful effect, the stronger the tension to swing in the opposite direction, and vice versa. This principle is manifested in the stock market, which means that when the stock market's popularity is too high and the stock market hits new highs, a round of slump may occur next, while the stock market's popularity is low, when the stock price index keeps falling and cannot fall, a new round of rising market is coming soon. The ADR index is to judge the overall trend of the stock market in the future by measuring the increase and decrease in the stock market in a certain period of time.

Ii. Calculation of ADR indicators

1. calculation formula of ADR indicators
Because the selected computing cycle is different, the increase/decrease ratio ADR indicators include N-day ADR indicators, N-week ADR indicators, N-month ADR indicators, N-year ADR indicators, and n-minute ADR indicators. The daily and weekly ADR indicators are often used for stock market research and determination. Although their values are different during calculation, the basic calculation method is the same.
Taking daily ADR as an example, the formula is as follows:
ADR (n) = p1 2017p2
Formula, P1 = Σ na -- sum of the number of stocks increasing in N days
P2 = Σ Nd -- sum of the number of stocks falling within n days
N is the selected number of days, which is the daily ADR parameter.
The purpose of choosing the sum of the stock increase and the number of sellers within a certain parameter period is to avoid misleading analysis and determination due to the special performance of the stock market in a specific period. For example, the sum of the stock market rise and the number of sellers in a few days is selected to avoid the deviation of the ADR value due to the special performance of a certain day. The ADR diagram fluctuates back and forth around 1. The magnitude of the fluctuation is subject to the ADR value. There are many factors that affect the value of ADR, mainly the value between numerator and denominator in the formula and the size of parameter selection. In general, the selection of parameters is small, the space for up and down changes of the ADR value is relatively large, and the curve is fluctuating. The selection of parameters is large, the space for upward and downward changes of the ADR value is relatively small, and the ups and downs of the curve are relatively stable. There is no uniform standard for parameter settings. You can set parameters based on market changes and investors' preferences. The ADR diagram fluctuates back and forth around 1. The magnitude of the fluctuation is subject to the ADR value. Currently, the market commonly used parameters include 10, 14, and 5, 25, 30, and 60. The selection of ADR parameters plays an important role in the analysis and determination of ADR technical indicators. Different selection of parameters may bring different results for the analysis and determination of quotations, this will be detailed in the next special analysis and determination.

2. Calculation of ADR indicators
Taking the 6-day ADR index as an example, the specific process is as follows:
(1) In the above formula, PA is the sum of the number of rising homes in six days.
(2) In the above formula, PB is the total number of dropped homes in six days.
(3) from day 1, we can find the first ADR value, ADR = PA ÷ Pb
(4) from the first day, you must calculate the value of PA for the second day, minus the number of persons who rose on the first day, plus the number of persons who rose on the second day, and the number of persons who rose on the sixth day, code: PC
(5) from the first day, the Pb value of the first day must be deducted from the number of families that fell on the first day, plus the number of families that fell on the first day. The sum of the number of families that fell on the first day within six days is obtained, code: PD
(6) 7th days of ADR = PC terminal PD
(7) The 8th-day ADR value can be calculated by analogy.
(8) specific instances are shown in the table.
This table is the ADR value for the 6th day of January 1, November 1994. Because the ADR value in the current stock market technical software is automatically calculated by computer, investors do not need to calculate their own, mainly by understanding the calculation process to become familiar with the ADR indicators. What is more important for investors is how they use indicators to determine the trend of the stock trend.
Table 6-day Calculation of ADR
Rising number of households, increasing number of households, declining total ADR Value
11.18 79 92
11.21 86 85
11.22 6 186
11.23 5 193
11.24 75 93
11.25 187 11 438 660 0.66
11.28 25 159 384 727 0.53
11.29 77 91 375 733 0.51
11.30 35 132 404 679 0.59

Section 2 General judgment criteria for ADR indicators

The ADR index is used to determine the overall development trend of the stock market based on the increase and fall of all stocks in a certain period of time. It has different analysis methods in the multi-headed or short-selling markets. The general evaluation criteria of ADR indicators are mainly focused on the value range of ADR values and the cooperation between the ADR curve and the overall stock price index curve.

I. value range of ADR values

1. From the calculation method of ADR indicators, the value range of ADR is greater than 0. Theoretically, the ADR value can be very negative. However, in reality, except in the early stages of the formation of a stock market, when there are few listed stocks and all the stocks have risen sharply, the ADR value may be relatively large, for example, when the stock market in Shanghai was just formed in, its ADR value exceeded 10. Otherwise, there would be very few cases where the ADR value is greater than 3.

2. Generally, the large potential can be divided into several regions by the value of ADR.
(1) The ADR value ranges from 0.5 to 1.5, indicating that the ADR is in the normal region. When the ADR is in a normal region, it indicates that both sides are evenly matched. The market trend is not fluctuating and stable, and the stock market trend is a consolidation market. This area is a frequent area where ADR values appear.
(2) When the ADR value is between 0.3-0.5 or 1.5-2, the ADR value is in an abnormal region. When the ADR is in an abnormal area between 1.5 and 2, it indicates that the multi-headed power is dominant, and the market starts to rise all the way up. The stock market trend is a multi-headed market; when the ADR is in an abnormal area between 0.3 and 0.5, it indicates that the short position is dominant, and the market begins to fall all the way. The stock market trend is a short market. The two regions are the regions where the ADR values are relatively small.
(3) When the ADR value is below 0.3 or above, the ADR is in an extremely abnormal region. When the ADR is in an extremely abnormal region, it is mainly caused by sudden increase in the stock market and sharp drop in the market. At this time, the stock market trend belongs to a large short or large multi-headed market.

3. Purchase and Sale decisions of the region where ADR is located
(1) When the ADR value is less than 0.5, it indicates that the trend has been falling for a long time and oversold. Many stock prices may stop falling, stabilize, and rebound, investors can make a rebound by buying a small number of ultra-low stocks in the short term.
(2) When the ADR value is greater than 1.5, it indicates that the general trend has been rising for a long time and there has been an overbought phenomenon. Many stock prices may have risen excessively, and there will be a large decline in prices, investors should sell shares or hold currency in time.
(3) When the ADR value is between 0.5 and 1.5, it indicates that the general trend is basically in the market, and there is no special phenomenon of overselling and overselling. At this time, investors are more important to study and determine the stock market.
(4) When the ADR value is below 0.3, it indicates that the overall trend is at the end of the big bear market, and there has been a serious overselling phenomenon in the market. The prices of many stocks have fallen and cannot be lowered, investors can share their stocks at low prices in batches to create a long-term warehouse investment.
(5) When the ADR value is above 1.5, it indicates that the trend is at the end of the large multi-headed market, and there has been a serious out-of-order phenomenon in the market. The price of many stocks has increased too much, there will be a big drop in the market. At this time, investors should sell their shares in time.

Ii. Cooperation between the ADR curve and the overall stock price index curve

In terms of the general trend, the ADR indicators have a leading role in warning, especially in the middle-and short-term callback or rebound, Which can lead the way than the overall stock price index curve. If the deviation between the overall stock price index curve and the ADR curve occurs, the trend may be about to reverse. The combination of the ADR curve and the overall stock price index curve mainly covers the following aspects.
1. The ADR curve is rising, while the overall stock price index curve is also rising, which means that the entire stock market is in the overall rising stage and the stock market trend will continue to rise, the market is very popular, and investors can actively make stock investment decisions.
2. the ADR curve continues to fall, while the overall stock price index curve also drops, which means that the entire stock market is in the overall decline stage and the stock market trend will continue to fall, low popularity in the market, investors should focus on holding coins.
3. The ADR curve began to fall down from high to high, while the overall stock price index curve is still slowly rising, which means that the stock market trend may show a "Top deviation" phenomenon, especially after a long period of market rise. The rise in the overall stock price index and the decline in the ADR value from a high position indicate that the stock market has led the rise in the first-tier large-cap stocks, while most second-and third-tier small-cap stocks have fallen, making the rise difficult to sustain.
4. The ADR curve starts to rise from the bottom, while the overall stock price index curve continues to fall, which means that the stock market trend may have a "bottom deviation" phenomenon, especially after a long period of decline in the market. The decline in the overall stock price index and the increase in the ADR value from the low position indicate that the decline in the overall stock price index is caused by the decline in large-disk stocks, however, after a long period of decline, many small inventory stocks began to show their investment prices. The main force is already building a warehouse, and the overall trend may soon stop falling and rebounding.

Section 3 Special Analysis Methods of ADR indicators

The special analysis methods of ADR indicators mainly include the status of ADR curves and the modification of ADR indicator parameters.

I. Forms of ADR Curves
(1) When the ADR curve forms a reverse pattern at a high position, such as the M-head or the triple-top, it may indicate that the market has changed from strong to weak, and the market is about to fall sharply, if the overall stock price index also appears in the same form, it can be confirmed that the decline can be determined by M-headed or triplicate theory.
(2) When the ADR curve shows a low base W or a triple base, it may indicate that the market has changed from weak to strong, and the market is about to rebound upwards, if the overall stock price index also appears in the same form, the increase can be determined by the W or triple base.
(3) Relatively speaking, the accuracy of the M-head or triple-top judgment of ADR indicators is higher than the W-bottom or triple-bottom judgment at the bottom.

2. Modify the ADR Parameters
The determination of ADR indicators varies with the selection of judgment parameters. The larger the parameter, the closer the upper and lower limits of the normal region of ADR to 1. The smaller the parameter, the farther the upper and lower limits to 1. Therefore, the selection of ADR index parameters will affect the relationship between the ADR curve and the value-1 line, thus directly affecting the analysis and determination of the dashboard. Section 4 practical skills of ADR indicators
Like other indicators dedicated to studying the trend of the dashboard, the structure of the ADR indicators is relatively simple. Its analysis and determination mainly focuses on the relationship between the ADR curve and the value-1 Line and Its Operation direction. Next, we will take the 88-day ADR indicator on analyticdb as an example to reveal the conversion signal of the NIU Xiong and the NIU Xiong validation signal of the ADR indicator.

I. Conversion signal of Niu Xiong

1. When the market has experienced a round of bear market adjustments, if the ADR curve on the 88 day is consolidated for a period of time in a region not far from the Value Line 1, once the ADR curve goes above the 1-Value Line and the index curve has already exceeded the medium-and long-term index moving average, it means that the entire stock market is in the overall rising stage, the stock market trend will continue to rise, and the market is very popular. This is the bear market to bull market signal issued by the ADR index. At this time, investors can actively make stock purchase decisions. (18-1.
2. When the market has been experiencing a bull market rise for more than a year, if the ADR curve has begun to turn down above the value 1 line, once the ADR curve breaks down the value 1 line, in addition, when the index curve of the dashboard has already broken through the Medium-and Long-Term index moving average, it means that the market bull market is over, and the market sentiment begins to scatter. This is the bull market to bear market signal issued by the ADR indicator. At this time, investors should promptly sell all their shares. (18-2.

Ii. Continuous Signal

1. When the ADR curve breaks through the value line 1 and the bull market reversal trend of the conversion has been confirmed, as long as the ADR curve is always running above the value line 1 and the index curve of the dashboard is also running on the medium-and long-term index moving average, this means that the dashboard is still in a large bull market, this is a sustained bull market signal from the ADR indicator. At this time, investors mainly make decisions on the choice of individual stocks for sale and holding. (18-3.
2. When the ADR curve breaks down the value line 1 and the bear market reversal trend of the conversion has been confirmed, as long as the ADR curve is always running below the 1-Value Line and the index curve is also squashed by the medium-and long-term index moving average, it means that the market is still in a large round of long-term bear market, this is a bear market signal from the ADR indicators. At this time, it is best for investors to stay out of the stock market and do not blindly buy or hold stocks.