Hi Greg,
IMHO, the A/D line must be viewed within the context of other breadth and sentiment indicators. And, in any event, a much better indicator is the Arms Index ($TRIN), which corrects for relative volume in advancing issues and declining issues.
stockcharts.com
If, for example, there are more advancing issues than declining issues, but the volume in the advancing issues is small, and that in the declining issues large, then the A/D line will erroneously conclude that the market is strong---but the Arms Index will not. The converse is also true, of course (i.e, with light volume in declining issues, and heavy volume in advancing issues, but advancers outnumbering decliners, the A/D line will erroneously signal bearish, but the Arms Index will correctly signal bullish). The upshot is that IMHO the Arms Index is a superior internal indicator to the A/D line.
Turns out the Arms Index for the $COMPX closed Friday in slightly bearish territory (0.93), after peaking at 2.23 on Thursday. The NYSE TRIN is in bullish territory at 1.33, with a pretty bullish $TICK value of 445.
briefing.com
My take on all this is that the NYSE is poised to move higher, but the $COMPX is uncommitted and equivocal, but with a slight bias towards the downside. Looking at the chart of QQQ, the technicals are consistent with this picture:
askresearch.com
Note the conflicting early technical indications, simultaneously signaling buy (OBV, Williams) and sell (PROC, stochastic). Perhaps this is reflecting money cycling out of the $COMPX and into the NYSE.
JMVHO, as always........
T |
