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A/D
Indicators |
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Indicators based on the "advances" and "declines" concept -
The lowest A/D issues and A/D volume ratios in 2001
In 2001, there were 4 instances where the S&P 500 index reached
critically low A/D issues and A/D volume ratios.
| Table
1. Lowest critical A/D
volume and A/D issues ratios. S&P 500 index. 1998.
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Chart #1: Lowest critical
A/D volume and A/D issues ratios. S&P 500 index. January to June
2001. (In the bottom pane, A/D issues ratios are listed at the top
and A/D volume ratios at the bottom).
 |
| Chart #2 - Point A, B:
|
Between the end of August 200 and April 3, 2001
(point B), the S&P 500 declined by 30%. It was only then, at points A and B,
that traders showed real panic. The extremely low A/D issues and volume ratios
reached at point A (March 12) were not yet sufficient to reverse the market into
a mid-term uptrend; however, the further 15-day decline leading up to point B
(April 3) led to a 2-month mid-term upswing (April - May, 2001). After hitting
lows at point B, the S&P 500 index proceeded to recover more than half (19%) the
losses it had incurred during its previous 30% slide. |
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| Chart # 1 - Point C:
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June 14, 2001 (point C) was the next date with
critically low A/D ratios readings. In spite of the low sentiment readings, the
market hardly bounced and the index pushed significantly lower. This is one of
the rare occasions where the index did not react to extremely low sentiment
readings. From point C, the only upward reaction we noted was a brief push
higher of 1.7% over 5 days. |
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| Chart # 1 - Point D:
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After hitting critically
low A/D ratios readings on September 19, 2001 (point D), the S&P 500
index rebounded with a speedy recovery of more than 13%. Between August
28 and September 21, 2001, market breadth remained consistently negative
to strongly negative; however, critically low sentiment levels were
reached only once - on September 17. Four trading days later, on
September 21, 2001, the index reversed to the upside and proceeded to
gain more than 13% (as measured from point D). |
Next
V. K.
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