Stock market breadth remains healthy though stretched
The advance/decline line (ADL) is recognised by many investors as an accurate measure of the health of the stock market. The ADL simply measures the number of rising and falling stocks on the NYSE. When the ADL is rising, the majority of stocks on the exchange are in an uptrend; when the ADL is falling, the opposite is true. Usually, the ADL forms a peak ahead of the stock market. As fewer and fewer stocks participate in the rally, the trend in the ADL reverses and starts heading lower, usually weeks or months before the stock market tops out and prices reverse lower. Today, the ADL is making new all time highs suggesting that the strong momentum move higher will continue in the months ahead.