Market breadth continues to rise to confirm an ongoing cyclical bull market. Breadth
continues to make new highs, but note how the uptrend in the cumulative A/D line has
been fading since the Fed raised the issue of tapering its QE 3 program in May and since
there has been a sharp upswing in the long Treasury yield as well. The more interest rate
sensitive sectors and funds have lost considerable momentum since the spring of this year,
leaving the A/D line with a much milder trajectory. NYSE Cumulative A/D
Breadth has been edging a little closer to trouble, but it has not reached it yet even though
the A/D line has broken the normally important 30 day m/a on several recent occasions. A
break below the 145K line just ahead could signify something more serious as that would
would herald more downside after a period of just slightly higher highs since May. Note as
well that the RSI for the A/D line is trending down, but note too that touches of RSI
down around the 30 level in recent years have proven to be decent 'buy' markers.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!