The Advance-Decline Line As A Tool In Technical Market Analysis
The Trend's your friend!
Raging Bull Market or Chop-Meat?
Let the Advance-Decline Line Help You Decide!
The whole grab-bag of market averages does a great job of telling us what
happened in the past, but are of little help in predicting the future.
What
happened, is of course necessary from an accounting standpoint. But what
the
future holds is the burning question for the investor.
For us that means how much longer does the Great Bull have to go? This
monster has shrugged off the deficit, trade problems, gyrations of the
dollar, collapse of the S & Ls, and the implosion of the junk bond market.
Looking backwards we can see that "Black Monday" (October 19, 1987) and
Saddam's invasion of Kuwait were barely hurdles for this golden calf. What
were then seen as cataclysmic events, in retrospect, were really buying
op****tunities.
But only the very foolish (destined to be separated from their money) will
think that the Great Bull is immortal. Like a horrendous storm, like the
Caesars, like Napoleon, this market force is destined to sweep over the
landscape only to pass away. The crowd of naysayers that, at many points,
predicted the imminent end of the market's advance were wrong, but only
with
reference to timing. The timid investor, by paying heed to those voices of
doom and gloom, has missed many chances to make money. But the halt and
retreat will come. Only those that want to buy in at the top will not be
concerned about when that day will come.
The advance-decline line is one of the most powerful tools in technical
market analysis. The advance-decline line, used in comparison with the
major
market averages, signals when bull markets are in interim retreat or are
about to end. The advance-decline line is used in conjunction with other
market data, in particular broader market and OTC indexes. This will be
treated at length in upcoming articles.
.. . .
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