Yesterday, I showed Merrill’s most active A/D line, which had broken out to new highs.
One reader took exception with this, suggesting that its a case of bullish confirmation bias. I disagreed for 2 simple reasons:
-Merrill’s “Chart Talk” has been running the most active A/D chart for years;
-Any index or major technical analytical measure making a new high is newsworthy
I appreciate the insidious nature of various biases in our wetware — and I want readers to keep pushing back on anything that remotely looks like bullish or bearish bias in action.
Ironically, the day after that discussion, Merrill’s Technical Analysis group noted the break out in the A/D line of the Nasdaq 100 — itself at 13 year highs.
To paraphrase Stephen Colbert, sometimes Reality just has a bullish bias . . .
Text from Merrill’s wonks after the jump
The NASDAQ 100 A-D line is strong
The advance-decline line for the NASDAQ 100 (NDX) is strong with a break to new highs that preceded the new highs in the NDX.
NASDAQ 100 breaks to 13-year highs
The NASDAQ 100 (NDX) is breaking to new 13-year highs and remains in a secular bull market with upside potential to 3265-3280 (pattern count and 61.8% retracement of the 2000 to 2002 decline). The rising channel from early 2009 provides additional resistance near 3500. Key support is 2875-2800 and has held. The NDX has decoupled from Apple (AAPL), which has had a much weaker trend and at 11.25% of the NDX, AAPL remains the heaviest weighted stock in the index. The advance-decline line for the NDX is strong with a break to new highs that preceded the new highs in the NDX (side bar).
NASDAQ indices break to new 13-year highs
Stephen Suttmeier and Jue Xiong
Merrill Lynch, July 12, 2013
Market Analysis | United States