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August 17, 2005
NDX Breadth
The Advance Decline Line for the Nasdaq 100 is lagging. This line is a cumulative measure of advances less declines (daily). The indicator reflects the level of participation when the Nasdaq 100 moves higher or lower.
Participation in the May advance was broad and strong as the AD Line moved sharply high. However, participation in the July advance was not as strong as the AD Line stalled near the early June high (red line). The Nasdaq 100 easily broke its early June high and the AD Line has formed a negative divergence for all intents and purposes. This shows that fewer stocks partook in the July advance and this is not healthy. The AD Line went on to break the May trendline, 50-day SMA and is now poised to test support form the July low. Unless the AD Line can recover and move back above its 50-day SMA, my stance on breadth is bearish.
Posted by Arthur B. Hill at August 17, 2005 05:57 PM