Absolute Breadth Index (ABI)

What is ‘Absolute Breadth Index – ABI’

A market indicator used to determine volatility levels in the market without factoring in price direction. It is calculated by taking the absolute value of the difference between the number of advancing issues and the number of declining issues. Typically, large numbers suggest volatility is increasing, which is likely to cause significant changes in stock prices in the coming weeks.

Explaining ‘Absolute Breadth Index – ABI’

This tool is classified as a breadth indicator because the advancing/declining values are the only values used to create it. This index can be calculated using any exchange or a subset of an exchange, but traditionally the New York Stock Exchange has been the accepted standard.

Further Reading

  • Does it pay to be good… and does it matter? A meta-analysis of the relationship between corporate social and financial performance – papers.ssrn.com [PDF]
  • Financial Contracts and the New Bankruptcy Code: Insulating Markets from Bankrupt Debtors and Bankruptcy Judges – heinonline.org [PDF]
  • Information content and forecasting ability of sentiment indicators: case of real estate market – aresjournals.org [PDF]