Breadth · Activity
Absolute Breadth Index
Advances minus declines, with the sign thrown away. It is the one breadth measure that refuses to say which side won, and reports instead how unanimous the session was.
The calculation
ABI = |advancing issues − declining issues|. One subtraction and one absolute value, from the same two counts every measure in this section starts with.
The absolute value is the entire design. It makes a session where 90 per cent of issues rose and one where 90 per cent fell produce the same reading: which sounds like information being destroyed, and is better understood as a different question being asked. Everything else here answers which way; this answers how unanimously.
The ratio-adjusted form
The raw index scales with the size of the exchange list. Fifteen hundred issues net is an extraordinary session on a list of two thousand and an ordinary one on a list of four thousand, and the American exchanges have changed size substantially over the decades through listings, delistings, and the growth of funds and preferred issues.
Dividing by the number of issues traded fixes it: |advances − declines| ÷ (advances + declines) × 100, a percentage that means the same thing on any list and in any decade. On the series above the peak session reads 80% of issues traded, which is a statement anyone can compare with their own market. Any historical threshold quoted in raw form should be treated as folklore until it has been recomputed this way.
What it is good for, stated narrowly
This is one of the weaker measures in the section and the page should say so. It generates no signals, its extreme readings occur at both market lows and sharp rallies, and the historical claims attached to it are thinner than for the advance/decline line or the new-high and new-low counts.
What it does supply is a clean, one-number answer to a question the others cannot express: was this session contested or unanimous. Smoothed over a week or two it describes stretches in which the market has been moving as a block, which is worth knowing when reading any other breadth figure, a divergence in the advance/decline line means something different in a market where every issue moves together than in one where the list is genuinely splitting.
Reading it as a companion rather than alone
Almost nobody watches this index on its own, and that is the right instinct. Its value is as a qualifier on the other breadth readings: the same advance/decline divergence means one thing in a market where the list has been moving as a block and another where issues have been going separate ways for weeks.
A concrete pairing makes it usable. Read the ratio-adjusted index over a couple of weeks alongside the advance/decline line: a narrowing A/D line while unanimity is low describes a market genuinely splitting into leaders and laggards, which is the classic narrowing. The same A/D line while unanimity is high describes something duller, a market moving together and drifting down, where the divergence carries much less information than it appears to.
Where it misleads
| Situation | What goes wrong |
|---|---|
| Read directionally | The absolute value discards the sign entirely. A collapse and a rally produce identical readings. |
| Raw values compared over time | The number scales with the size of the exchange list. Use the ratio-adjusted form for anything historical. |
| Treated as a signal | Extremes cluster at capitulation lows and on sharp recovery days alike; the record behind them is thin. |
| Non-operating issues | Funds and preferreds moving together on rate news produce exactly the unanimity the index detects. |
| Read as independent of the A/D ratio | Same two counts. Two views of one input are not two pieces of evidence. |
| Unchanged issues ignored | Only advances and declines enter it, so a session where most of the list closed flat can still read high. |
Unchanged issues, and what the formula never sees
Only advances and declines enter the subtraction, so issues that closed exactly flat are absent from both terms. On a decimalised tape genuinely unchanged closes are rare enough that this rarely distorts a reading, and on an illiquid list, or on a holiday-shortened session, it can: a market where most issues did not move at all can still produce a high reading from the handful that did.
The check is to look at the two counts themselves rather than only their difference. Advances of 600 against declines of 200 and advances of 60 against declines of 20 both give a raw index of 400 and 40 respectively, but as a share of what traded they are the identical market, which is the argument for the ratio-adjusted form all over again.
What volume adds
The index counts how many issues agreed and says nothing about the size behind the agreement. A unanimous session on the heaviest volume of the quarter and an equally unanimous one on the thinnest are the same reading here, and they are not the same market.
That is the gap TRIN exists to close, since it divides the breadth ratio by the volume ratio, and it is why the pairing of an activity measure with a volume-weighted one is more informative than either read alone. Unanimity with no volume behind it usually describes a market nobody was trading rather than one everybody agreed with.
Frequently asked questions
How is the absolute breadth index calculated?
The absolute value of advancing issues minus declining issues. That is the whole formula, the same subtraction every other breadth measure starts from, with the sign thrown away. Norman Fosback described it in the 1970s, and the discarding of direction is deliberate rather than an oversight: the measure is about how divided the market was, not which side won.
What does a high reading mean?
That the session was decisive one way or the other, a large majority of issues moved together. A low reading means the market split roughly evenly, which is what an indecisive session looks like when it is measured. Fosback’s framing was as a volatility measure for the market’s internals: high readings describe active markets, low readings quiet ones, and neither says which direction.
Why would anyone want to discard the direction?
Because the question being asked is about agreement, not about outcome. Every other measure built on these two counts answers "which way"; this one answers "how unanimously", and those genuinely differ. A market where 90 per cent of issues fell and one where 90 per cent rose are the same event in this respect and opposite in every other; the index reports the property they share.
Is it comparable across exchanges or decades?
Not in its raw form, because the number scales with how many issues are listed. A reading of 1,200 means something quite different on a list of 2,000 issues than on one of 3,500, and the American exchanges have changed size substantially. Dividing by the total issues traded — a ratio-adjusted version — removes the dependence and is the only form worth comparing across periods.
How does it relate to the advance/decline ratio?
They are computed from the same two numbers and answer opposite halves of the question. The ratio divides advances by declines and is entirely about direction; this subtracts them and discards it. Because they share their only input they are not independent evidence about anything, but they are genuinely complementary: the pair says both how one-sided the session was and which side it was.
Is a high reading bullish or bearish?
Neither, and that is not evasion, the calculation contains no information about direction. In practice the highest readings cluster in violent markets of both kinds, which is why the index tends to peak near capitulation lows and on sharp recovery days alike. Anyone reading it directionally has supplied the direction themselves.
What is it actually used for?
As a description of how contested a market has been, usually smoothed over a week or two, and as a rough volatility gauge for the internals rather than the index price. It is not a signal generator: the readings say nothing about what happens next, and the historical claims attached to extreme levels are weaker than for almost any other breadth measure here.
Does it need common-stock-only data?
It benefits more than most. A list containing several hundred closed-end funds and preferred issues will move a large number of them together on interest-rate news, which produces exactly the unanimous session this index is built to detect, and the unanimity has nothing to do with equities. Where a common-stock-only count is available it is the better input, as it is for every measure in this section.