Last week we looked at the NYSE cumulative advance decline line to see if the market internals were stronger than the range bound indexes. This is an important exercise because while indexes are useful, at times they can mask what is really happening in the market as a whole. While one data provider shows the cumulative NYSE advance decline line reaching a new high, there are reasons to doubt this as a real show of underlying strength.
For starters, the same measure for the Nasdaq market is no where near multi year highs. It is instead mired at the same levels as we last saw in October and November 2008. As well, the operating company only advance decline (which strips out the effects of interest rate sensitive issues on the big board) is similarly weak.
The NYSE common stocks only advance decline volume line is yet another measure of breadth from Decision Point which again shows the weakness hidden in the market. This is especially apparent when you consider the S&P 500 instead of the NYSE Composite Index.
While the S&P 500 is trading slightly above its October highs, the breadth is much weaker. And it has gotten worse since it peaked in mid September:
Here’s a recent overview of the market from 3 time frames from Decision Point. In summary, they are neutral in the short term, negative in the medium term and bullish in the long term. To see why, check out the link.
By the way, this link to the Decision Point analysis was posted days ago at news.tradersnarrative.com That’s where I post interesting links like this everyday so check it out to find interesting news, resources, articles and analysis of the market from many different sources.
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