Chart of the Week: Nasdaq A/D Volume Line

Nasdaq’s A/D Volume Line for the Nasdaq Composite broke below the trendline from the start of the rally. This indicator also broke below the 50-day Moving Average for the second time this month. The 50-day moving average has been successfully tested in August, October and December (gray arrows).

Nasdaq A/D Volume Line
nasdaq_ad_line.bmp
Source: Stockcharts

The trend line break and move below the 50-day EMA signal that volume in declining stocks is outpacing volume in advancing stocks. With more fuel powering declining stocks, traders should prepare for a correction or consolidation in the Nasdaq.

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