Trader’s Narrative

Here’s a quick update to my commentary yesterday about the NYSE cumulative advance decline reaching a new high.

Here is an operating company only cumulative advance decline chart for the NYSE (with thanks to a reader at Barclays Capital). As I surmised, it walks the middle ground between the all inclusive NYSE breadth and the Nasdaq cumulative advance decline statistics.

As a result, it isn’t nearly as bullish as when we include all those interest sensitive NYSE issues. Unlike its more inclusive counterpart, the operating company only cumulative advance decline hasn’t even been able to rise above its high in mid October 2009:

Different data sources for market statistics hardly ever agree with one another. The charts in my previous post were based on data from Thomson Reuters while these charts are from Bloomberg. On a daily basis, the difference between them is negligible, but since this is a cumulative measure, the tiny discrepancies build up over time and become significant.

Bloomberg’s NYSE cumulative (all inclusive) advance decline hasn’t reached the 2007 high. But if we zoom into the short term, you can see that it has overtaken its October 2009 high (just like the one from Thomson Reuters):

So I wouldn’t be surprised if this chart would (mis)interpreted by many to mean that there is underlying strength in the stock market and that index prices will mimic the market internals and head higher. To avoid that, all you have to do is compare the operating company only cumulative advance decline with the all issues cumulative advance decline.