SPX A-D line a bullish leading indicator

Although the S&P 500 (SPX) advance-decline (A-D) line eased slightly yesterday, new highs for this important market breadth indicator from late November into late December suggest broad-based participation and provide a bullish leading indicator for new highs on the SPX. This increases the potential for the index to rally to new highs and confirm its tactical bullish cup and handle from late October, targeting 7200-7300. See the December 19 The Chart Check report for more details on this cup and handle formation.

New highs for the SPX A-D line in early May also provided a bullish leading indicator and preceded new highs for the index in late June (May 10 Charted Market Insights).

Chart 1: S&P 500 and the S&P 500 advance-decline line