Markets Are Soaring But Wait, AD line Negative

Discussion in 'Trading' started by myminitrading, Jul 16, 2007.

  1. A few heavily weighted sectors doing all the work.
  2. ronblack


    This is always the case. It is highly improbable to have a sustained across the board rally. Always there are leaders. In the NASDAQ rally of late 90's, the leaders were the dot coms and the AD line kept going south during the duration of the rally. Look it up...

  3. Not always the case.
  4. I would like to compare new highs in this rally to other times.
  5. what's your point? yes, it's a divergence. divergences are nifty, but what does that tell you in regards to trades and or investments?
  6. It tells me after a fast sprint, the market is tired and may need to catch it's breath with a correction or sideways trading.
  7. The point is a simple one. Although the indexes are moving higher, the majority of stocks are moving lower.

    Advancing Issues 1,325 (41%) 586 (48%) 1,234 (40%) 543 (32%)
    Declining Issues 1,777 (55%) 557 (45%) 1,685 (55%) 708 (42%)
    Unchanged Issues 124 (4%) 86 (7%) 129 (4%) 425 (25%)

    This tells me that money seems to be moving into the more heavily weighted issues.

    Simply put, there are many shorting opportunities and places where you can buy puts. You wont see these opportunities if you just look at the indexes alone. Slowly but surely, the indexes will rest upon just a handful of heavily weighted stocks until they dont.

    So what we know is that this is a good time to short as there are more declining issues then advancing issues.

  8. but if you want to go back and check you will realize we have had these divergences many times

    newbie traders LOVE divergences. but making a trade decision solely on an AD divergence is ridiculous, and not a robust methodology
  9. S2007S


    mike this has been happening for quite sometime, surprised to see this market continue its way higher without and kind of pullback, I think it pushes up to 14k today. Its been a slow steady rise all day, once 14k is crossed volume is going to surge....
  10. just another great day of buying

    The AD line isnt a big deal
    #10     Jul 16, 2007