NYAD NYSE Advance-Decline Daily Chart

Keystone discusses this NYAD chart often. Last week we saw Monday's intraday high occur up towards +2300 (red circle) signaling that a pull back in the markets was needed and it occurred as forecasted. Then on Thursday the intraday and the closing price printed -2200 (green circle) indicating that a snap-back rally needs to occur. So a quickie long side trade took advantage of the uber low to ride that long pop back up on Friday. But in Friday's action the chart overcompensates moving from an uber low number directly up into another uber high number printing +2146. There is still a bit of room to move higher but the markets are now needing a snap back sell off to remedy the high value.

The red circles show market tops of interest; the double red circles show significant tops. Conversely, green cirlces show market bottoms; the double green circles significant bottoms. The strong market correlation is obvious. Thus, the quickie long play is closed on Friday and a new quickie short side play is intiated due to the +2146 print. The short can be pressed for any further move up of the NYAD, or profits taken once the market selling occurs. As of this writing, Monday morning before the open, 12/12/11, the futures are down large so perhaps the NYAD will move to the lower extreme again in short order, and the Friday short should work out fine.

The rule of thumb is to think about market shorts at NYAD +2100 and higher, and think about market long plays at NYAD -2100 and lower. The readings in the middle do not tell you anything except that the selling, or buying, is occurring in a steady-eddy fashion. For now, Keystone is looking for a snap back sell off to remedy that high +2100 number. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.