Upside-Downside Volume Line

 

The Upside-Downside Volume Line is a market breadth indicator and should be compared to the other market indices like the Dow Jones or S&P 500. Daily or weekly NYSE data is used in the calculation. Because the Upside-Downside Volume Line reflects the action of the general market, any divergences are watched closely by market technicians. As long as the Dow and the Upside-Downside Volume Line are moving in the same direction the trend will continue. If the Dow makes a new high which is not confirmed by a high of the Upside-Downside Volume Line, caution is warranted. It is more affirmative than the Advance-Decline Line and it gave a perfect sell signal in January 2000, when the Dow made a new high and the Upside-Downside Volume Line lagged behind (charts below). Vice versa, if the Dow makes a new low and the Upside-Downside Volume Line doesn't, you should cover your short sales. To calculate your own weekly Upside-Downside Volume Line is very simple and you can begin your calculations at any time. Just pick a large enough base number like 1000000. Then you calculate each week (or day) the difference between the upside volume and downside volume by adding the volume of advancing issues and subtracting the volume of declining issues. If you have an upside volume of 673210 and a downside volume of 732827 on your first week, the reading of your newly created weekly Upside-Downside Volume Line would be 940383 (example below).

 

 

Date

Upside Volume

Downside Volume

U-D Volume Line

     

1000000

09.06.95

673210

732827

940383

16.06.95

943121

565840

1317664

23.06.95

964871

666807

1615728

30.06.95

674725

765076

1525377

07.07.95

867512

353025

2039864

14.07.95

945574

756197

2229241

21.07.95

755969

1027248

1957962

28.07.95

1008468

584579

2381851

04.08.95

733204

703285

2411770

11.08.95

565588

669580

2307778

18.08.95

796723

615752

2488749

25.08.95

629338

603130

2514957

01.09.95

727349

553140

2689166

08.09.95

746298

418632

3016832

 

  Here is a beautiful example of the Upside-Downside Volume Line. Volume moves the markets and this indicator gave a perfect sell signal in December 1999, when the Dow made a new high and the Upside-Downside Volume Line didn't. It would have kept you also on the right side of the market right to the top.
 
 

Upside-Downside Volume Line

 
TechnicalAnalysisSite.com - Upside-Downside Volume Line
 

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Past performance does not guarantee future results!
 
   
 


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