Some of Wall Street’s Favorite Indicators are Hot

Despite many concerns in the world today, the bull market we’re in remains strong.

Stocks keep climbing, seemingly despite the worries that lie ahead. Perhaps that because there are several indicators signaling the U.S. stock market is categorically healthy.

One of Wall Street’s favorite indicators is the advance/decline (A/D) line for stocks listed on the New York Stock Exchange. The A/D line measures the number of New York Stock Exchange stocks going up versus going down over time.

The A/D line takes the number of stocks that went up in a given day and subtracts the number of stocks that went down. When more stocks rise, the line goes up, and vice versa.

It might sound simple, but it’s a very powerful indicator of market breadth. In a typical bull market, the A/D line of the New York Stock Exchange usually goes up as more stocks rise. That’s what’s been happening since the April “Liberation Day” tariff pause.

More than 60% of New York Stock Exchange stocks are trading above their 200-day moving averages. Also, the equal-weight S&P 500 is trading at new highs along with five of the top six S&P 500 sectors (comprising about 85% of the benchmark cap weighted index).

These are all bullish indicators. And we’ll keep watching them to see if the market is remaining healthy or getting sick.

For example, when the A/D line moves lower while the market continues to rise, as happened in late 2021, it’s usually time to worry. That means the gains in stocks are concentrated in just a few companies, however, the headline movement of these indexes obscures that fact. We’re not in that situation yet, but it’s something to watch.

If you’d like to explore what these strong market-breadth indicators might mean for your retirement strategy, let’s talk. At Dan White & Associates, our team has decades of experience helping individuals navigate the ups and downs of the markets while keeping their long-term goals front and center. Give us a call at 302-212-4666 to schedule your complimentary consultation. Let’s put the strength of the market to work for you.

Visit us at: https://danwhiteandassociates.com/