Archives for August 2018

August 2018 - Page 19 of 19 - Money Morning - Only the News You Can Profit From

This Is Telling Me the Market May Take a Break

Last month, I showed you how lots of stocks had been participating in upside moves, not just the FANGMA – Facebook, Apple, Netflix, Google, Microsoft, and – heavyweights.

Now, I've likened breadth, which I'll tell you a little more about, to my "canary in the coal mine." And by far my favorite way to see whether the canary starts to feel queasy is by watching the cumulative advance/decline line.

As a quick reminder, this indicator starts with a daily breadth number. "Breadth" is the number of stocks on the New York Stock Exchange that closed higher than yesterday minus the number that closed lower. That's where the term "advance/decline" comes from.

When we add up that breadth number day after day, we "accumulate" the daily breadth numbers, giving us a cumulative advance/decline (A-D) line.

Most of the time, when the market goes up or down, the cumulative A-D line moves in lockstep.

Conceptually, the reason why this is an important metric is very straightforward, as well. If only a few stocks are pulling the market up, then it only takes one of those stocks to fall hard to send the market spiraling.

So far, the market's resisted doing that. But I'm seeing things that suggest we may be in for, if not a huge move down, then some decidedly more up-and-down action before long.

Have a look at these charts...