Monday, December 03, 2007

Advance-Decline Lines and More Thoughts for Monday

* Tracking the Advance/Decline Lines - We're only about 5% off the bull market highs in the NYSE Composite Index, but a look at the Advance/Decline specific to NYSE common stocks (just the operating companies, not including funds and preferred issues) shows us in a clear downtrend, with the line well below its previous peak, even after the recent market rebound. An even more evident downtrend in the A/D line can be found among the S&P 600 small cap issues. The A/D lines for the S&P 500 stocks and NASDAQ 100 issues held above their August lows during the market drop, despite a lower high at the prior market peak. Interestingly, the line for the Dow 30 stocks is very near its bull market high. In some ways this market reminds me of the 2000-early 2001 period, in which the large caps held their value while the formerly strong tech stocks entered a bear market. In the present market, of course, it's the financials taking the role of the tech stocks.

* A Collection of Market Themes - Abnormal Returns tracks a decline in global interest rates, increased stresses on the markets, and unusual bearishness among newsletter writers. Charles Kirk finds some very interesting themes, including the shadow banking system and why it's fragile. Trader Mike updates themes with views on selling tech and questioning the recent market rebound. The Big Picture follows up with a wide variety of views, including concerns over junk bonds, a fresh look at financial issues, and a contrarian view of markets.

* The Importance of Resilience - The Trade by Trend blog offers a great example of sticking with one's convictions through a drawdown.

* Gratitude - Interesting interview with Dr. Robert Emmons on the role of gratitude in personal happiness and positive psychology.

* Indicators Site - Many thanks to gangsTA for passing along this very useful site that compiles market indicators. Very helpful charts.

* Questioning Indicators - I'll be following up on this post shortly, questioning the value of many indicators for daytraders.