FYI: Regardless of whether stocks rally or decline, looking beneath the surface at market breadth helps to confirm the market’s direction. When equities rally you want to see broad participation among individual stocks. When the market rallies and participation among individual stocks narrows, it usually indicates a weaker foundation. Technicians measure breadth in several different ways, but one of the most popular is the Cumulative A/D Line. For those who are unfamiliar with the term, the A/D line measures the difference between the number of stocks in a given index that finish up on the day versus the number that declined. Adding the net daily readings together gives you a cumulative total. With stocks off their highs from late February/early March, we wanted to check on breadth for two things. First, when the S&P 500 hit its high, did the cumulative A/D line confirm the rally? Secondly, as stocks pull back, is breadth deteriorating?
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/breadth-holding-up/
