The advance decline line (aka AD line) is a number composed of the net sum of advancing stocks minus the number of declining stocks.
Example: A day with 500 advancing stock and 2000 declining stocks would yield an a/d line of -1500.
How to Use the Advance Decline Line
An advance decline line reading of greater than 1500 or -1500 is usually indicative of a trending day. Therefore if the AD Line opened the day at +1600 and remained at this level or better, any pullback would be a valid buy or add because internally the same number of stocks are still advancing.
This scenario is flipped for shorts, with an a/d line of say, -1900 any bounce would be a valid short.