A lot has been said about the usefulness of the New York Stock Exchange’s Advance-Decline line (NYAD) in forecasting the market’s direction. Mostly, it is thought to be clear sailing when the NYAD makes a new uptrend high and especially a new all-time high (ATH) while the market has not done so yet. Why?
Supposedly because “breath leads price.”
However, a recent paper by Vincent Randazzo, CMT from Lowry’s research, pointed out: ”While it is often recited in technical analysis circles that ideally, breadth should lead price in healthy uptrends, it is rarely observed. In fact, between 1940 and 2019, there have only been nine observations of this condition. In 1940, after a drawdown of 10% or more, the NYSE Advance-
Decline Line made a new multi-year or all-time high, while the major price indexes were comparatively lower. So, with that myth pretty much debunked, is it also true that with the NYAD making new ATHs it is clear sailing for your investments?