The construction is a macd applied to breadth data rather than price: a 19 day and a 39 day exponential average of net advances, subtracted. Readings oscillate around zero.
It is read for extremes, which can indicate breadth exhaustion, for zero-line crosses as a breadth trend change, and for divergence against the index. Very high positive readings coming off a low base are associated with the start of strong advances.
It is a second-order measure, an oscillator of a breadth series, and inherits both smoothing lag and the noise of daily advance-decline counts. It also varies with the number of listed issues, so historical comparisons need the ratio-adjusted version.
Related: mcclellan-summation-index, advance-decline-line, market-breadth, macd, breadth-thrust