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Chapter 6. Bottom Fishing, Top Spotting,... > The New York Stock Exchange Advance-...

The New York Stock Exchange Advance-Decline Line

Relating to Advance-Decline Breadth Data

In a general sense—I know of no really firm parameters—certain observations can be made regarding the relationships between the movements of the daily and weekly advance-decline lines (internal market) and the various weighted market indices (external market). The Value Line Arithmetic Index, an unweighted index that includes all the issues in the Standard & Poor’s 500 Index plus 1,200 additional stocks, appears more correlated with the New York Stock Exchange–based advance-decline line than other market indices, such as the Dow Industrials and the Standard & Poor’s 500 Index.

The advance-decline line and the Value Line Arithmetic Index are both fine indicators of how the typical mutual fund is likely to perform, but the performance of neither is as closely correlated to the mutual fund universe as the performance of the broadly based New York Stock Exchange Index.


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