Dubious rally today.

Discussion in 'Stocks' started by TheDudeofLife, Jul 23, 2007.

  1. the AD line is very reliable. it tells you what the AD *is*

    it is only UNRELIABLE if you think it's a trading signal based on some nontested negative expectancy trading idea.

    the AD, unlike many indicators is not derived. iow, it is not (like RSI, MACD, etc.) a formula applied to past price points that is supposed to have some sort of predictive value.

    it is simply a measure of breadth.

    saying AD isn't reliable is like saying the dow jones industrial average isn't reliable.

    one is a measure of breadth in various markets (NYSE:AD NASD:AD), the other is a measure of performance in a (somewhat arbitrary) basket of 30 stocks.

    if you understand what AD is, then it is 100% reliable - as a measure of breadth. how you choose to USE that data is what matters.

    AD is much like market profile. i rely on both extensively. neither is a trading system or a signal. neither is a derived indicator. both are measures of exactly what market participants are doing.

    understood in that context it is extremely useful

    AD is one of the few things that i ALWAYS watch, along with TICK, tape, and price.
     
    #21     Jul 23, 2007