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Last week, we noted that the NYSE A/D line had completed its continuation pattern, suggesting that the intermediate-term uptrend had resumed. We were looking for a pullback to relieve the short-term overbought readings so the A/D line could form a positive zig-zag pattern. Monday’s higher close and positive market internals have caused the A/D line to turn higher (see arrow), and a positive close on Tuesday would be bullish. Weak earnings from IBM are likely to cause a lower opening, so the close is the event to watch.
Tom Aspray, professional trader and analyst, serves as video content editor for MoneyShow.com. The views expressed here are his own.
