Below we highlight a trading range chart of the S&P 500 along with its 10-day advance/decline line. The 10-day A/D line is a breadth indicator that measures the underlying strength of the market. It takes the average daily number of advancers minus decliners over the last ten days. Currently, the A/D line is in neutral territory, resting just below zero. While the index price didn't quite get to overbought territory earlier this week, the A/D line did. One area of concern is that the A/D line has made a series of lower highs in recent months, meaning breadth has been weaker and weaker on subsequent rallies.
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