|
UPSIDE/DOWNSIDE RATIO
Overview
The Upside/Downside Ratio shows the relationship between up (advancing) and down
(declining) volume on the New York Stock Exchange.
Click here for more information on Advancing, declining, and
unchanged volume.
Interpretation
When the Upside/Downside Ratio is greater than 1.0, it is showing that there is more volume
associated with stocks that are increasing in price than with stocks that are decreasing in
price.
While discussing advancing/declining volume in his book,
Winning on Wall Street, Martin Zweig
states, "Every bull market in history, and many good intermediate advances, have been
launched with a buying stampede that included one or more 9-to-1 days" ("9-to-1" refers to
a day were the Upside/Downside Ratio is greater than nine). He goes on to say, "the 9-to-1
up day is a most encouraging sign, and having two of them within a reasonably short span is
very bullish. I call it a "double 9-to-1" when two such days occur with three months of
one another."
Table 15 (originally tabulated through 1984 by Martin Zweig) shows all of the
double 9-to-1 buy signals that occurred from 1962 to October 1994. As of this writing, no
signals have occurred since the last one on June 8, 1988.
|
Table 15 |
| Date |
DJIA |
% Chg
3 m later |
% Chg
6 m later |
% Chg
12 m later |
| 11/12/62 |
624 |
+8.5 |
+15.9 |
+20.2 |
| 11/19/63 |
751 |
+6.9 |
+9.1 |
+16.5 |
| 10/12/66 |
778 |
+6.9 |
+8.6 |
+17.4 |
| 5/27/70 |
663 |
+14.6 |
+17.8 |
+16.5 |
| 11/19/71 |
830 |
+11.8 |
+17.0 |
+22.8 |
| 9/19/75 |
830 |
+1.7 |
+18.1 |
+19.9 |
| 4/22/80 |
790 |
+11.8 |
+17.0 |
+22.8 |
| 3/22/82 |
820 |
-2.4 |
+13.2 |
+37.0 |
| 8/20/82 |
869 |
+15.1 |
+24.3 |
+38.4 |
| 1/6/83 |
1,071 |
+3.9 |
+14.0 |
+20.2 |
| 8/2/84 |
1,166 |
+4.4 |
+10.6 |
+16.0 |
| 11/23/84 |
1,220 |
+4.7 |
+6.2 |
+19.3 |
| 1/2/87 |
1,927 |
+20.4 |
+26.4 |
+4.6 |
| 10/29/87 |
1,938 |
+1.0 |
+4.9 |
+10.8 |
| 1/4/88 |
2,015 |
-1.7 |
+7.1 |
+8.0 |
| 6/8/88 |
2,102 |
-1.9 |
+1.9 |
+19.7 |
| AVERAGE |
|
+6.4 / qtr. |
+12.5 / half |
+18.4 / year |
Example
The following chart shows the Dow Jones
Industrial Average during most of the 1980s.
I drew "buy" arrows on the chart where double
9-to-1 buy signals occurred.
Calculation
The Upside/Downside Ratio is calculated by dividing the daily volume of advancing stocks by
the daily volume of declining stocks.
|
