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MetaStock
Formula - Absolute
Breadth Index
rev. 01/06/97
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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