A clip from the Getting Technical market letter - Interim Update December 4, 2013 GT1417 – page 2 – “A Probable Short Trading Correction”
“The Advance / Decline Line (AD line) is one of the most widely used indicators to measure the breadth of a stock market advance or decline. The AD line tracks the net difference between advancing and declining issues. It is usually compared to a market average where divergence from that average would be an early indication of a possible trend reversal. The upper plot (see chart) is the S&P500 and the lower plot is the NYSE A/D line. Some worry now as the A/D Line is just now breaking DOWN below the resistance peaks of May, July and Sept.”
Summary: This is a trading call and should be ignored by longer term investors.
Note the S&P500 close of 1795 on the December 3, 2013 chart and at the close today the S&P500 was 1782. If that lower trend line is extended through year-end the downside target is only about 1750. That is not a lot of downside but just enough to scare Santa away this year.