I observe see that the Big Money Breadth Index compiled by Richard Russell of Dow Theory Letters is
showing great strength while the A-D line has been weakening by showing
resistance to making new highs. New highs in the DJ Industrials and S and P 500 confirm that the blue chips are currently the predominant Indexes. Does this indicate that the next rally, assuming
it comes before a major decline, will be one led by the blue chips with the
majority of stocks lagging? In the past, this has been a formula for the
creation of major market tops. One thing I have puzzled about is how the type
of scenario described above comports with the
observation that a major rally in "cats and dogs" also is the harbinger of a
longer-term market peak. Can the "cats and dogs" experience an upside explosion
while the A-D line is weakening?
Of course it is quite possible that the A-D
line, which has led the market up since the March 10, 2009 lows, is simply
undergoing a much-deserved consolidation after which it will resume its strength.
I hope that this is the case for it would portend a longer extension of this
mini-bull market. This uptrend is drawing closer to equaling in length the 1970-1973 mini-bull advance, which has been a sort of longevity benchmark for me.
Simply because it has such a large population,
it is well to remember that China needs to surpass the US in absolute GDP just
to raise its per capita income closer to that of the "developed" nations .
Especially ironic for a "Communist" country, China has huge disparities in the
distribution of wealth.
