Markets Are Soaring But Wait, AD line Negative

Quote from myminitrading:

A few heavily weighted sectors doing all the work.
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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...

Ron
 
Quote from 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...

Ron
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Not always the case.
 
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?
 
Quote from whitster:

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?
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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.
 
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.

Quote from whitster:

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?
More...
 
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
 
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....
 
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