Constructing a cumulative market-thrust line

Direction is the diagnostic

The ordinary advance-decline line is a running total of advancing issues minus declining issues. Because the level depends on the chosen start date, direction is treated as more informative than the absolute reading.

That unweighted construction omits traded volume and the size of each stock's price change. The omission is equivalent to treating every issue as one share that moved one unit.

A volume-inclusive running total

A market-thrust increment multiplies advancing issues by upside volume and declining issues by downside volume. Adding those increments to a running total produces a volumetric advance-decline line, the cumulative market-thrust line.

The thrust oscillator divides the same net volume-weighted breadth by the corresponding total so upside and downside activity share one scale. That oscillator can itself be cumulated. A 21-day simple moving average of the thrust oscillator moving below -0.30 was used as an oversold construction marker at significant bottoms.

When volume rotates, the lines can part

If upside and downside volume were always equal, the two running totals would differ only by a scale factor. When volume rotates against the trend, the lines can diverge over weeks, including inside a trading range.

Same tape, different confirmation

At the August 1982 low, the advance-decline line made a lower low with the composite index while the market-thrust line made a higher low. That pattern is consistent with shrinking downside volume against a new price low.

From late 1989 into 1991 the unweighted advance-decline line stayed weaker than the composite index, including during the 1991 advance, while the market-thrust line stayed more aligned with the index.

During the 1992 trading range the advance-decline line posted lower highs or lower lows against the index, while the market-thrust line held an upward channel of higher lows.

Ahead of the 1993 summer advance the market-thrust line broke to new highs in early June, whereas the advance-decline line stayed sideways until late July.

Editorial view: these episodes show that price-breadth divergence is construction-specific. A lasting disagreement with a broad price index on one line does not automatically appear on the other.