what does the a d line tell you 
the a d line is used to confirm the strength of a current trend and its likelihood of reversing the indicator shows if the majority of stocks are participating in the direction of the market if the indexes are moving up but the a d line is sloping downwards called bearish divergence it s a sign that the markets are losing their breadth and may be about to reverse direction if the slope of the a d line is up and the market is trending upward then the market is said to be healthy conversely if the indexes are continuing to move lower and the a d line has turned upwards called bullish divergence it may be an indication that the sellers are losing their conviction if the a d line and the markets are both trending lower together there is a greater chance that declining prices will continue difference between the a d line and arms index trin the a d line is typically used as a longer term indicator showing how many stocks are rising and falling over time the arms index trin on the other hand is typically a shorter term indicator that measures the ratio of advancing stocks to the ratio of advancing volume because the calculations and the time frame they focus on are different both these indicators tell traders different pieces of information limitations of using the a d linethe a d line won t always provide accurate readings in regards to nasdaq stocks this is because the nasdaq frequently lists small speculative companies many of which eventually fail or get delisted while the stocks get delisted on the exchange they remain in the prior calculated values of the a d line this then affects future calculations which are added to the cumulative prior value because of this the a d line will sometimes fall for extended periods of time even while nasdaq related indexes are rising another thing to be aware of is that some indexes are market capitalization weighted this means that the bigger the company the more impact they have on the index s movement the a d line gives equal weight to all stocks therefore it is a better gauge of the average small to mid cap stock and not the fewer in number large or mega cap stocks investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal 