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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 2003
In 2003, there were 8 instances where the S&P 500 index reached
critically low A/D issues and A/D volume ratios, as summarized in Table 1 below.
| Table
1. Lowest critical A/D
volume and A/D issues ratios. S&P 500 index. 2003.
|
Chart #1:
Lowest critical A/D volume and A/D issues ratios. S&P 500 index.
January to April 2003. (In the bottom pane, A/D issues ratios are
listed at the top and A/D volume ratios at the bottom).
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| Chart #2 - Point A-C:
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On January 24, critically low A/D ratios were
reached; however, the index hardly bounced and instead continued to push lower
for more than another month. At point B, the index again reached critically low
sentiment readings; at point C, panic selling took hold. After reaching point C,
the index gained more than 20%, recovering ground until July. |
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| Chart # 1 - Point D:
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March 24 (point D) was characterized by a strong
one-day decline that once again resulted in panic selling among traders. Between
points C and D, the index had already made a recovery of more than 10%, so at
point D, it might not have seemed likely to anyone that the recovery would still
continue. But the panic selling that took place at this time only paved the way
for a further index gains - by July, the market had pushed over 10% higher. |
Chart #2:
Lowest critical A/D volume and A/D issues ratios. S&P 500 index. May
to October 2003. (In the bottom pane, A/D issues ratios are listed
at the top and A/D volume ratios at the bottom).
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| Chart #2 - Point A:
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On May 19 (point A) the S&P 500 index dropped about 2.6%. A
single day with a substantial decline created an extremely negative market
sentiment. A few days later, the market had reverted back to its previous
uptrend. Within a month after the panic selling seen at point A, the market was
trading over 5% higher. |
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| Chart # 1 - Point B-C:
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After the A/D issues and volume ratios had reached critical
levels on June 23 (point B), the index proceeded to regain ground, but recovered
by only 3.5%. After this brief rebound, the S&P 500 continued its push lower and
sold off, reaching extremely low sentiment readings on August 5 (point C). Even
though point C was only 10 points below point B, the selling pressure at that
level was intense. Immediately after point B, selling pressure abated and the
S&P 500 index started a new recovery process. |
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| Chart # 1 - Point D:
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Once again, critically low A/D volume
and A/D issues ratios were reached, this time on September 22 (point D).
A two-day sell-off led to the extremely negative market sentiment. Point
D might be seen as a confirmation for the mid-term up-trend that began
with critically low A/D volume and issues ratios on August 5, 2003.
Panic selling between May to August 2003 when index moved
sideway created in summary help to move the S&P 500 index more then 20%
up (from point C) by the end of January 2004. |
Next
V. K.
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