Advance/Decline Technical Analysis (Breadth Analysis)
Advance Decline Weekly Report
Friday, July 29, 2005
|Chart 1.||Advancing and Declining (AD) Issues and AD Volume. |
S&P 500 Index. July 25, 2005 to July 29, 2005.
Intraday Data (One Bar = 5 minutes)
|Table 1.||Advancing and Declining (AD) Issues and AD Volume. |
S&P 500 Index. July 25, 2005 to July 29, 2005.
|Online, the data in this table can best be viewed using a 6-month AD chart. Select the following settings: "Adv/Decl" and either "Adv / Decl Volume or "Adv / Decl Issues". Apply a 1-day A/D MA (moving average).|
Table 1 above shows that:
- July 25: On this day, 347 S&P 500 stocks declined while 145 issues advanced. Losers topped winners by a margin of 7 to 3 (an Advance/Decline issues ratio of 0.42). Based on volume readings, sentiment was similar - here, losers beat winners by a margin of 2 to 1 (an A/D volume ratio of 0.46). The session's highest Adv/Decl issues and Advance/Decline volume readings (of 2.41 and 3.22, respectively) were recorded at 10:45. By this time, the index had gained about 0.35%. The S&P 500 then spent the remainder of the session declining, ending the day 0.37% below the previous session's close. Overall, the data points to a negative to neutral market mood for this session;
- July 26: 296 stocks were in the advancing issues group and 196 belonged to the group of decliners. Based on the number of issues, advances beat declines by a ratio of 3 to 2 (an Advance/Decline issues ratio of 1.51). Volume readings show that winners topped losers by a margin of 3 to 2 (an A/D volume ratio of 1.54). The highest Adv/Decl issues ratio of the session - a value of 2.73 - was noted around 10:15. By this time, the index had gained about 0.39%. The index moved sideways for much of the day. The session's data reveals an overall neutral market mood;
- July 27: By the end of trading, 301 stocks in the S&P 500 index belonged to the group of advancing issues, but only 191 were counted among the group of declining issues. Winners topped losers by a margin of 8 to 5 (an Advance/Decline issues ratio of 1.58). In regards to volume readings, market sentiment was more elevated, with winners topping losers by a margin of 2 to 1 (an A/D volume ratio of 1.98). The highest Adv/Decl issues (of 2.33) and Advance/Decline volume ratios (of 2.19) were noted around 9:40. By this time, the index had gained roughly 0.25%. The session's lowest A/D issues and A/D volume readings (an Advance/Decline issues ratio of 0.76 and an Adv/Decl volume ratio of 0.90) were recorded around 10:15. By this time, the index had declined approximately 0.07%. Following these upswings and downswings, the index moved sideways until 13:00, then started an advance. Even though the S&P 500 closed the session with gain of 0.45%, market mood did not push past a neutral reading. The session's data thus points to an overall neutral market sentiment for this day;
- July 28: By the end of trading, we counted 386 advancing stocks and 107 declining issues. Advances thus beat declines by a ratio of almost 18 to 5 (an A/D issues ratio of 3.61). On the volume side, results were lower, generating an Adv/Decl volume ratio of 2.07. Following some early gyrations, the index proceeded to move forward strongly; however, this advance was not able to push sentiment readings into strongly positive territory. At 15:25, the A/D issues ratio reached its highest daily level of 3.81; the same was the case for the A/D volume ratio. By this time, the index had gained about 0.59%. The large divergence between the Advance/Decline issues and Adv/Decl volume ratios (TRIN = 1.74) shows that declining stocks were traded more actively than advancing issues. The average volume traded per declining issue was 5.02 M; the average volume traded per advanced stock amounted to only 2.88 M. We conclude from the session's data that market breadth was positive;
- July 29: By the end of trading, we counted 386 declining stocks and 108 advancing issues. Declines beat advances by a ratio of 7 to 2 (an A/D issues ratio of 0.28). The day's volume data reveals that declines topped advances by virtually the same ratio - by a factor of 7 to 2 - leading to an Advance/Decline volume ratio of 0.29. The S&P 500 index declined strongly throughout most of this session. The downdraft abated temporarily between 12:35 and 14:25; but after that time, the decline continued with renewed vigor. The lowest A/D issues and Adv/Decl volume ratios of the session occurred around 15:55, after the index had suffered a loss of 0.74% from its opening level. This was associated with an A/D issues ratio of 0.26. The session was dominated by a negative market breadth.
The S&P 500 index posted a slim 0.04% gain for the week, thus closing roughly unchanged from the previous week. Overall market mood readings came in mixed this week. Trading began on a neutral sentiment and remained at that level for the first three days. Then on Thursday, the index's gain of 0.56% boosted market mood into positive territory. On Friday, sentiment slipped clearly into negative territory, associated with the index's decline of 0.76% that day.
Overall, we assign a neutral market sentiment reading to this week; however, if we also take the following two factors into consideration, we could assess this week's market mood slightly lower - assigning a neutral to negative reading: (1) Despite the index's positive action on Thursday, trading activity was concentrated in the group of declining stocks; (2) On Friday, the S&P 500 showed a decline, closing the week out on a strong downbeat.