Breadth May Be Breaking Down

If you want to blame it on decimalization or non-common stocks, I've calculated what I will refer to as the "old" A/D: It includes only common stocks, and in order to be an advancer or decliner, the stock would have to move at least 12.5 cents. The net result is exactly the same: The big up day netted us roughly +850, and the next three days gave it all back and then some. The "old" A/D ended the week with a net loss of about -500.

To put this in perspective, let's take a look at the week before last. The S&P ended the week with a net gain of about 3 points, while the A/D ended with a net gain of +1,600. You can see why I'm saying that a subtle change is taking place here. While one week does not make a trend, I think it's important to note when the market begins to do something different. Last week, the market's breadth did something it hasn't been doing.

Overbought/Oversold Oscillators

For more explanation of these indicators, check out The Chartist's primer.

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Helene Meisler, based in Shanghai, writes a technical analysis column on the U.S. equity markets and updates her charts daily. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback and invites you to send it to [e-mail].