GZ:
Thanks. I have looked at that transition from the negative or positive cumulative A/D to the positive or negative cumulative A/D. Sometimes it doubles back and returns in the same direction. The other way I look at the cumulative A/D is to plot the extremes under the theory that we can only take so much of one thing. That was my interest in the -17,000 plus count in 8/98. I had expected it to bottom at about -12,000. However, I did not take into account the average daily trades. Even using the extremes can result in the working off of the positive or negative count to a certain extent with a double back return in the same direction. Currently, I still have a negative 200 count but I use the WSJ numbers which are a bit different from Yahoo.
In addition to the the A/D analysis, I have added volume to the analysis so I have average daily volume per stock. It is an improvement on the simple A/D line. However, it is not perfect either. At least it went positive at the end of January 1998.
Overall, I can not discount the possibility of moving up. We held at 7700 on the DJI which is a moving resistance point in a line that has not been breached significantly on a closing basis in this bull run since 11/94. It was stunning how we held at or near that level this week on a closing basis. I do not bet against that line until it is clearly broken.
On the other hand, what I do leads me to believe that big money is still in a trading mode between big stocks and treasuries. If we are still in that mode, when they pull the rug out we will take a huge dive to new lows. Such a move, if it happens, would complete the second leg down of a Dow Theory move in the major indices and would, confirm for me, that we are in a bear market in the major indices.
Currently, everything else I have is negative. If we go up from here, there would be time to get in. I think. But who really knows. |
