Market breadth is one of the tools I use to gauge market sentiment. Although it has been a bit more challenging in recent conditions, it is part of the technical analysis trade when gauging broad based strength and broad based weakness.$ADD measures advancing over declining activity: Advancing (buyers), Declining (sellers). Here is range for you fam on zones....
Did a basic analysis that looked at the pattern for the highs of the adv-decl (AD) at the week time frame. I then compared that to the S&P 500. You can see that starting around the end of June the AD has been showing lower highs. You can see the same pattern leading up to the other corrections in the S&P. The time between corrections is also in the correct time...
Dusted off my AD line analysis and made some updates. Not sure it is helpful in predicting what is going to happen, but the different motive and corrective waves are visible. The jobs report rally is also clearly visible and a clear departure from normal
See my charts on S&P 500 and VIX for more details.
The pattern in the AD line are still holding just like the patterns in the S&P 500 and VIX. There was definitely some "noise" in the AD line, but overall the pattern held.
Just an update after a fun day today. The big buying spree this morning clearly did not fit the pattern. However, the cyclic pattern in the AD eventually won out. Interesting to see how long it holds.
The pattern over the last month is very clear in the AD analysis. I marked the 3 locations that show the exact same pattern. This pattern gave us the last 2 pullbacks. Hard to see why it would not happen again tomorrow.
For something a little different, here is a look at the NYSE Advance-Decline Line (AD Line). I am using this to look for the next market reversal. Based on this analysis, it looks like today maybe the last up day for the market with a reversal coming end of today (3:30pm), Monday, or worst case Tuesday. This analysis is supported analysis of both the SPX and VIX...
The Advance/Decline Line or ‘A/D Line’ for short, is the second most important of the internals. This indicator tells us the net sum of advancing stocks minus declining stocks.
The A/D Line is expressed: # of Advancing Stocks – # of Declining Stocks
There are roughly 3000 stocks listed on the NYSE and 3000 on the NASDAQ. An A/D Line reading of 1,500+ is very...
