Market Breadth

rimtas.lt | 2011-01-22 15:30 | perskaitė: 2509
Raktiniai žodžiai: breadth
Market Breadth The term „breadth“ refers to the percentage of component segments of a market that are participating in its trend. In the overall stock market, for instance

The term „breadth“ refers to the percentage of component segments of a market that are participating in its trend. In the overall stock market, for instance, such components include sectors, groups and individual stocks. Every advancing Fifth wave, regadless of degree, has narrower breadth, i.e a lower ratio of segment participation, than its corresponding Third wave. This is just as true of Cycle waves as Minor waves.

 

One measure of breadth is the cumulative sum of the ratios of the number of stocks up each day minus the number down, normalized for the total number of changed issues. This indicator is called the advance-decline line. If you study the Chart below, you will see that the a-d line‘s performance is better in any wave labeled with the number three than in the subsequent wave of the same degree labeled with the number five. The flat a-d line of the 1920’s signaled the end of the entire advance from 1857. Similarly, the flat line in the mid-1960’s signaled the end of the 1942-1966 bull market. The inability of this line in the 1999 to surpass its 1966 high both reflects and supports the labeling that it has been a fifth wave, wave V, which ended the entire Supercycle (III) bull market.


If the chart is not in full capacity, please open this link   http://www.spekuliantai.lt/akciju-birza/diskusijos/getTopic/2110/643/jav-pulsas/





But just look what we have today. The 1999-2009 correction is barely visible on the a-d line, which supports my view that Grand Supercycle Wave III (dated from 1780’s) is not yet ended and this correction was a simple 3-3-5 Expanded flat. Flats are always occurring in the strong trends, usually in a Third Wave.

 

If you study carefully the Cumulative  NYAD chart at lesser degrees of trend (not shown), you will notice that almost every market turn at any degree did had  some sort of negative divergences before the turn ( this can not be true when C waves are peaking).

What is  even more interesting,  breadth a-d line already have surpassed the 2007 year peak and is expanding at accelerating pace, indicating that more and more segments are participating in market advance. Expanding breadth without any negative divergences even at Minor Degree precludes the possibility that a top is nigh. 

 

 

Given these evidences I can assume that the market entered the most powerful phase of the advance and the Point of Recognition of Primary degree is not far away, if  the Cycle Impulse Wave is developing.  When the power of this wave ends, the a-d line should experience its peak and start to decline in the background of the rising market, indicating, that the market peak is near.


Due to lack of data of this indicator(and others too) we  can only speculate about the Degree of the advance that is developing, so planing your life fifty years in advance will be available maybe to our progeny many hundreds or a thousand years later, when there will be enough waves to determine with  great confidence an accurate position of the Stock Market in the overall wave structure.
Our generation is doomed only to guess.

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