Tuesday, April 28, 2015

Where Are The Buyers?

I wanted to quickly touch on breadth from a different perspective today.  Below are the charts of the NYSE Composite and the Nasdaq.  The top panel of each compares the respective index (green) to its Advance/Decline Line (yellow).

There are a couple of observations to highlight.  The first being that the Nasdaq (+6.75%) has dramatically outperformed the NYSE (+3.35%) on a year-to-date basis.  However, the A/D lines for the indices tell a different story.  While Advancing/Declining issues for the NYSE is hitting new highs, the Nasdaq's A/D line has been languishing since last summer.  Further, neither index is seeing much in the way of 52-week highs being set.  The cause of this?  We're not entirely sure particularly in the case of the Nasdaq.  Take a look...

One possibility for the NYSE A/D line's clear breakout to new highs could be that the dollar has started to fall out of its 9 month channel.  Is money starting to rotate back into multinationals?  Something to think about.

Ryan Worch is the Managing Director of Worch Capital LLC. Worch Capital LLC is the general partner of a long/short equity strategy that operates with a directional bias and while emphasizing capital preservation at all times.

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