Today, the NYSE common stock cumulative AD line set an all-time new high by +425 net advances confirming the NYSE composite AD line all-time high achieved last week. The common stock AD line new high confirmation resets the clock for the extension of the bull market from the 2003 price lows.
The bullish case for more significant price highs going forward would like to see a more decisive common stock AD line break of the early August 2005 highs, but today's confirmation goes a long way in ensuring the bull run has more to go. The SPX, Russell 1000, and MID cumulative AD lines also achieved new bull market recovery highs leaving only the small caps to take out their recovery highs.
For the near term, the NYSE foreign components are giving caution signs of a consolidation or mild price pullback. The NYSE foreign stock components have been acting as a leading indicator for a few months, and today the NYSE foreign common stocks managed only 164 advances versus 184 declines, a negative divergence suggesting a short term pause in the 2006 rally may be near.
Thus far, the new year rally has been exhibiting a surprising and welcome high level of disbelief. Along with this positive sentiment action over the past week, plentiful liquidity is alive and well, thus any potential near term price pullbacks should be mild...