Broad Market Indicator #4: NYSE Advance Decline (A-D) Line

The 4th Indicator is a comparison of the movement of the DOW (DJIA) to the Advance-Decline line of the NYSE. The NYSE A-D line measures the number of stocks advancing versus declining on a weekly basis. We are looking to see if the Dow and the NYSE A-D are moving in convergence or divergence. When the DOW goes up but the NYSE A-D line goes down, it is an indication that investors are moving into safer stocks (DOW) as the DOW tends to have blue-chip companies. 

Here is Barron's chart plotting the NYSE against the DOW. I added the red boxes to show where the DOW moved up while the NYSE AD moved down, ominous signs!

You can follow Barron's chart at this link.

You can see the breakdown signal that occurred in August prior to the latest market correction. We will need to wait and see if we are about to go back down again for a period of time.