Chart Patterns and TA

[gfp927z]

Advance Decline Line -

Here's an interesting technical indicator that is fairly widely used - the Advance-Decline Line. I think Rinear has mentioned using it, and numerous analysts mention it periodically. It's somewhat tricky to set up on a TA chart (use $NYAD and then have to use 'cummulative' rather than candlesticks). The indicator doesn't give a danger signal very often, but when it does it appears to have excellent predictive value. The danger signal comes when the Advance Decline Line flattens or falls, but the market continues to climb higher (market breadth narrows).

Looking back, this divergence occurred during the last two weeks of Aug 2020, and was followed by a sharp market decline in Sept. This year there has been a prolonged ongoing divergence since mid-June, which steepened since mid-Nov. After Dec 20th the divergence has lessened, but it's still present. Anyway, could be a sign of a market pullback coming soon.

Some background info (AD Line info starts ~ 10:30) -