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Yesterday, I showed Merrill’s most active A/D line, which had broken out to new highs.

One reader took exception with this, suggesting that its a case of bullish confirmation bias. I disagreed for 2 simple reasons:

-Merrill’s “Chart Talk” has been running the most active A/D chart for years;
-Any index or major technical analytical measure making a new high is newsworthy

I appreciate the insidious nature of various biases in our wetware — and I want readers to keep pushing back on anything that remotely looks like bullish or bearish bias in action.

Ironically, the day after that discussion, Merrill’s Technical Analysis group noted the break out in the A/D line of the Nasdaq 100 — itself at 13 year highs.

To paraphrase Stephen Colbert, sometimes Reality just has a bullish bias . . .

Text from Merrill’s wonks after the jump


The NASDAQ 100 A-D line is strong
The advance-decline line for the NASDAQ 100 (NDX) is strong with a break to new highs that preceded the new highs in the NDX.

NASDAQ 100 breaks to 13-year highs
The NASDAQ 100 (NDX) is breaking to new 13-year highs and remains in a secular bull market with upside potential to 3265-3280 (pattern count and 61.8% retracement of the 2000 to 2002 decline). The rising channel from early 2009 provides additional resistance near 3500. Key support is 2875-2800 and has held. The NDX has decoupled from Apple (AAPL), which has had a much weaker trend and at 11.25% of the NDX, AAPL remains the heaviest weighted stock in the index. The advance-decline line for the NDX is strong with a break to new highs that preceded the new highs in the NDX (side bar).


NASDAQ indices break to new 13-year highs
Stephen Suttmeier and Jue Xiong
Merrill Lynch, July 12, 2013
Technical Analysis
Market Analysis | United States

Category: Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

3 Responses to “NASDAQ 100 A-D line At New Highs”

  1. chartist says:

    Nasdaq chart shows a divergence with the weekly MACD….The monthly MACD is at the highest level ever in the last 10 years….I am staying long but very selectively….Auto stocks remain a fav. I am still keying on the SPX and the impending divergence it will have with its weekly MACD once it trades to a new high. It is encouraging to see the RUT continue higher.

  2. Robert M says:

    It is the disconnect form the iceberg(aapl) that makes this real. In the 80′s, 90′s and early 00′s you could see the the super glue injected into the market place to secure the market place by buying IBM, EK, GM CPQ QCOm and others. Now to see this!
    I feel like Bruce Wayne if you don’t fear death you can’t win.

  3. leopardtrader says:

    My stupid comment earlier on how useless A/D or any other study for that matter to investing is missing. I believed this blog encourages visitors to express even their ignorance. I am firm that the moderator is versed enough to stand up to any argument. Let me continue to believe so!

    My argument remains that “talk is cheap”. Those that write history didnt make it. Investing/Trading is about anticipating the future not about statistical fittings. A/D lines for example will show different values in different timeframes. Again there could be other parameters as well to fine-tune. Of what use are those? Trading/Investing is a real business that must be perceived as so. No formula will ever deliver offer excess return on its own right. This some take by Barton Biggs (RIP) on such here