Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Do Stocks Bull Market Tops Need Breadth Divergences?

Stock-Markets / Stock Markets 2018 Mar 19, 2018 - 07:30 AM GMT

By: Troy_Bombardia

Stock-Markets

Despite what some bearish investors might say, the U.S. stock market’s breadth is IMPROVING right now. Here’s the NYSE’s Advance-Decline Cumulative Line. It is leading the S&P 500 higher.


Bull market tops are accompanied by bearish breadth divergences. (I.e. more stocks fall than rise in the last leg of a bull market.) These divergences last months if not years. Here are the historical cases:

  1. 2007
  2. 2000
  3. 1973
  4. 1968

Let’s look at these cases in detail.

2007

The U.S. stock market peaked in October 2007. The Advance-Decline line peaked in June 2007 and made a multi-month bearish divergence.

2000

The U.S. stock market peaked in March 2000. The Advance-Decline line peaked in April 1998 and made a bearish divergence that lasted 2 years.

1973

The U.S. stock market peaked in January 1972. The Advance-Decline line peaked in March 1972 and made a bearish divergence that lasted 10 months.

1968

The U.S. stock market peaked in December 1968. The Advance-Decline line peaked in April 1967 and made a bearish divergence that lasted for 1.5 years.

Conclusion

There has been no multi-month bearish breadth divergence today. This implies that the current equities bull market is not over and will last AT LEAST a few more months. This thesis is supported by other studies (Study: strong earnings growth is bullish for stocks).

It’s also worth noting that multi-week bearish breadth divergences were common before historical “significant corrections” began. Here’s an example featuring the 2015 “significant correction”.

Here’s an example showing that not all “significant corrections” are preceded by bearish breadth divergences. We cannot use breadth divergences to consistently and accurately predict “significant corrections”.

By Troy Bombardia

BullMarkets.co

I’m Troy Bombardia, the author behind BullMarkets.co. I used to run a hedge fund, but closed it due to a major health scare. I am now enjoying life and simply investing/trading my own account. I focus on long term performance and ignore short term performance.

Copyright 2018 © Troy Bombardia - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in