Bill,
I recently ran across this theory of A/D indicator in one of my books: (although I don't remember which book right now)
The A/D is considered a leading indicator of the market, so usually the correlation between the A/D and market index is quite high. When that correlation drops, that means there's a divergence between the A/D line and market, with a change in A/D line direction often preceding a change in market direction.
Another way to read it, is if the market makes higher highs, but the A/D line only makes lower highs, the market is weak and may turn down and vice versa.
Since I read about it, I've been tracking the A/D line against the SP500, and it's a good indicator, but not always leading by much.
I really should plot it against the NYSE index since that's what TC2000's A/D line is computed from.
BTW, TC2000 has a VIX--X volatility index available, don't know if it's the same as your VIX?
CL |
