The Upside/Downside Ratio function attempts to define the momentum of the market by measuring the ratio of the volumes of declining (down) to advancing (up) issues on the New York Stock Exchange. As a rule, this indicator is smoothed with a moving average to filter out day-to-day shifts and demonstrate longer-period trends.
When more volume is linked to stocks that are advancing (increasing in price) than those decreasing values will be greater than 1.0. When greater volume is linked to stocks with decreasing price values, they are less than 1.0.
The Upside/Downside Ratio is an effective oversold/overbought indicator. Very low values are likely to demonstrate that the market is becoming oversold. In the same way, very high values are likely to demonstrate that the market is becoming overbought with a sell-off happening rather soon as well as a prices' fall.
The so-called "Multiple 9-to-1 days" is another factor to seek (an Upside/Downside Ratio greater than nine). Two or more values of nine or greater within a 3-month period usually are able to demonstrate the start of a strong bull market. Martin Zweig states in his book "Winning on Wall Street": "Every bull market in history and a lot of good intermediate advances have started with a purchasing rush comprising one or more 9-to-1 days."