The picture is a snapshot of my AD Race indicator which tracks the A/D line of several indices both broad market and narrow.

There is a lot happening on this chart which breaks my mantra of KISS (keep it simple) but after a few months of watching the AD lines dance around you begin to pick up on some patterns.  I was attempting to show that shortly after 1pm a sell program kicked in and sold off a basket of stocks that drove down the S&P 500 A/D line as well as the Nasdaq 100 (SPY and QQQQ).  Both were hit much worst than the broader indexes or even the Dow.  Unfortunately the orange line is hand drawn and usually sits at line 0 to show the switch between a positive vs. negative AD line. For some reason in this shot it has shifted up so you will have to eyeball the 0 divide.

Before the 1pm sell off the N100 and SP500 A/D lines were positive.  The selloff drove them negative and over the course of the next 1 1/2 hours the SP500 began to recover but the N100 just wasn’t joining the party.  Look at the R2K line, it was showing a very strong 2:1 advance decline line.   So the question to ask is who is leading who.  Is the N100 just being late to the party, or is the R2000 out of control?

This is the shot at the end of the day.

You can see that right after the posting the QQQQ’s decided to join the party, and boy did they explode, only to see the waiting bears begin to sell and drive all the A/D lines down.

Everyone always ask me which way the market is going, I tell them I am too stupid to know, I just look for the parade and try to join in.  Today the parade went all over the place making this a difficult day to trade, but if you could find the crowd you could have made a ton of money in very short time.

Happy Trading

-RLT