NYSE Common Stock Advance-Decline Line vs Market Rotation
· You might remember that in late May I speculated that we could see some rotation from the mega-cap stocks and semiconductors into the broader market that could last a couple of months.
· It did happen.
· You could see that from early June until mid-August the A-D line was trending higher while the SPX was essentially moving sideways, and NDX (not shown) was slightly weaker.
· The A-D Line has been declining since mid-August and broke below its 200D MA, which usually implies it might touch, or worse, the 400D MA.
· The rotation into the broader stock market from mega-cap stocks started to fade in mid-August.
· Lately, on multiple occasions, the broad market weakness, often when oil prices were up, was masked by strength in several mega-caps.
When these mega-caps correct, the market may experience additional downside.
