The Advance/Decline Line Was Right

10/13/2010 2:18 pm EST

Focus: STRATEGIES

Thomas Aspray

, Professional Trader & Analyst

chart
Click to Enlarge

It now looks as though the correction was over Tuesday morning as stocks are very strong today with impressive advance/decline (A/D) numbers. Throughout the summer, I wrote several articles arguing that the stock market’s rally was not over in April because of the leading action of the A/D line. Here, I have highlighted the A/D line’s new highs, and you'll see that on September 8, the A/D line broke its downtrend and again moved to new highs. The A/D line indicates that the S&P 500 will eventually overcome the highs at 1219.80, though the rally may not overcome 1200 on the first attempt.

Tom Aspray, professional trader and analyst, serves as video content editor for MoneyShow.com. The views expressed here are his own.

Related Articles on STRATEGIES