Advance/Decline Technical Analysis (Breadth Analysis)
Advance Decline Weekly Report
Friday, December 03, 2004
Advancing and Declining (AD) Issues and AD
S&P 500 Index. November 30 to December 6, 2004.
Intraday Data (One Bar = 5 minutes)
|Table 1.||Advancing and
Declining (AD) Issues and AD Volume.
S&P 500 Index. November 30 to December 6, 2004
As you can see from Table 1 above:
- On November 30, 2004, 311 stocks in the S&P 500 index belonged to the group of declining issues, and only 178 to the group of advancing issues. In other words, losers topped winners by a margin of about 2 to 1 (an A/D issues ratio of 0.57). In terms of A/D volume, the ratio was somewhat closer - about 2 to 1.5 (an A/D volume ratio of 0.67). Market breadth was clearly negative on this day;
- On December 1, 2004, 417 stocks in the S&P 500 index were in the advancing issues group while only 74 belonged to the group of decliners. Advances beat declines almost 6 to 1 on issues (an A/D issues ratio of 5.64) with a similar result on volume (an A/D volume ratio of 5.43). The data tells us that market sentiment was strongly bullish on this day;
- On December 2, 2004, we counted only 190 stocks in the advancing issues group. As you can see, the balance between advancing and declining stocks was shifted to the declining group. Given the strongly bullish sentiment the previous day, this should not come as a surprise. Losers beat winners by a margin of about 3 to 2 in terms of both issues and volume (an A/D issues ratio of 0.64 versus an A/D volume ratio of 0.65). Sentiment on this date was negative, but not as negative as on November 30.
- On December 3, 2004, more than half of the index's stocks (i.e., 263 of 500) belonged to the advancing issues group - a more neutral sentiment than seen the previous day. While the A/D issues ratio was 1.18 (263 advances versus 223 declines), in terms of volume, winners topped losers to a greater extent, with a more bullish A/D volume ratio of 1.42. We can conclude from this data that market breadth was close to neutral and that market sentiment was more positive (healthier) than it had been on December 2;
- On December 6, 2004, 215 stocks belonged to the advancing issues group (fewer than on December 3, where we counted 263 advances). At first glance, it might seem as though sentiment was starting to slide to the negative side; however, volume activity was greater in the group of advancing stocks. Because the positive A/D volume ratio (1.25) compensated for the negative A/D issues ratio (0.79), sentiment can be considered neutral.
In summary, we can say the last three days the market moved sideway, that is not a surprise when you can see how strongly bullish sentiment was on December 12.