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Earl,
I'm just curious. What do you think of using a "Most Active Stocks (MAS) AD
line" along with the conventional broader AD line. I have come accross this
concept of using MAS AD line in Alexander Elder's book--'Trading for a
Living'.
The most active stocks (say top 30 or top 50) are chosen accoring to their
daily turnover in terms of value. According to Dr Elder, this shows what the
'smart money' is doing.
Any comments.
Thanks.
Rajat
>From: "Earl Adamy" <eadamy@xxxxxxxxxx>
>Reply-To: eadamy@xxxxxxxxxx
>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>Subject: Re: MKT US Equities - Advance/Decline Line Insight
>Date: Sun, 9 May 1999 13:19:18 -0600
>
>I'm sure you know this, but I think there is common misuse of cause and
>effect. A declining A/D is frequently cited as the reason why the market
>must fall when in fact a declining A/D in a rising market is a
>non-confirmation which makes the price movement suspect. The price movement
>is confirmed (a kind of market is ok) when the A/D moves up to confirm
>price. A/D confirmation frequently lags the market. The Dow Jones theory of
>Transports confirming the Industrials is similarly misused - the failure of
>the Transports to confirm price moves in the Industrials does not mean the
>Industrials will decline, it means the move is suspect. The Transports
>frequently confirm on a lagging basis.
>
>As you say, the McOsc provides a good basis for understanding market moves,
>however extreme levels may require smoothing to become useful.
>
>Earl
>
>----- Original Message -----
>From: Ira <ist@xxxxxx>
>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>Sent: Sunday, May 09, 1999 12:43 PM
>Subject: Re: MKT US Equities - Advance/Decline Line Insight
>
>
> > You can't have it both ways. With the advance decline line continuing
>to
>go
> > lower, the guru's have been saying the market is going to fall apart.
>Now
>that
> > the advance/decline is bottoming???? you are saying a rally is in the
>offing.
> > What have we been doing? Why has the AD line been wrong all this time
>and
>all of
> > a sudden it is going to be right. Try the McClellan Oscillator, it will
>give you
> > a better idea of what the internals look like. It also is dependent
>upon
>the
> > advances and declines, but has a tradable range. Ira
> >
> > BOTTrader@xxxxxxx wrote:
> >
> > > I watch the advance/decline line over the shorter term, as one input
>to
>my
> > > overall timing, and intra-day as an input to SP trading..... There's a
> > > website DEVOTED to advance/decline which really goes into great detail
>on the
> > > subject (more than I want to know)..... I find the guy's work very
> > > interesting...... It's at www.ttheory.com, check it out..... By the
>way,
>he
> > > see's the same bottoming pattern in the Ad/Dec, and the likelihood
>that
>it
> > > will expand upward and take the market to significant new highs over
>the
>next
> > > few years, a position he's just recently taken.
> >
>
>
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