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Absolute Breadth Index
MetaStock Formula
The Absolute Breadth Index (ABI) is a market momentum indicator
that was developed by Norman G. Fosback. The ABI shows how much
activity, volatility, and change is taking place on the New York
Stock Exchange while ignoring the direction prices are headed. You
can think of the ABI as an "activity index". High readings indicate
market activity and change, while low readings indicate lack of
change. In Mr. Fosback's book, Stock Market Logic, he indicates that
historically, high values typically lead to higher prices three to
twelve months later.
The MetaStock formula for the Absolute Breadth Index is:
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ABS
( Advancing Issues - Declining Issues )
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To plot it:
- Create a composite security of the Advancing Issues -
Declining Issues. In Windows versions use The DownLoader to
create the composite or in the DOS versions use MetaStock's File
Maintenance to create the composite.
- In MetaStock open the composite and plot the custom formula
ABS( C ) on it.
**For interpretation refer to the book Stock Market Logic
by Norman G. Fosback.
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