Dow 167 Point Rally Sept. 26, 2014

On Thurs. Sept 25 the DJIA was down 264 points and the $SPX 32 points. On a Big Down day like that, one might have expected the NYSE A-D line ($NYAD) to show a reading of -2500 or lower. But it only posted a plurality of -2034. On Friday, when the Dow rallied 167 points, the $NYAD line plurality was +1416, much better than the +550 that it recorded on Wednesday Sept 24, when the DJIA rose 154 points. The $NYAD's derivative indicator, the McClellan Oscillator (filter of the  $NYAD) moved up from -79 to -43.
Just as a weakening A-D line portended a sharp market sell-off, a strengthening A-D line will confirm a resumption of the uptrend. Such a relationship is usually the case, but toward the end of bull markets the large cap stocks can continue up strongly without support from the A-D line. The Jan. 1999 - Mar.2000 period was a classic example of this. So far in this bull market, the A-D has led the market up, and the $SPX has not been able to mount a sustained rally without accompanying strength in the $NYAD. That pattern shows no evidence of changing now. For the $SPX uptrend to strengthen,challenge and surpass the $SPX 2019 high, Friday's improving A-D action must continue, and preferably accelerate.   The fact the the A-D line became resurgent right at the bottom of the 1973 Objective Elliott Wave pivot range (at 1966) seems like significant support for the idea that 1966 was a Minor 2 bottom and that a Minor 3 rally is now commencing in earnest.
While there is a correlation between the A-D line and the $RUT, it seems to exist mainly in one direction. Which is to say that for the $RUT to make new highs, it is necessary for the A-D line to do likewise; however the A-D line can ascend to new heights without the $RUT following suit. Tony Caldero and various Objective Elliott Wave posters have commented that the $RUT seems technically broken. For the rest of Primary III I expect that the R2K will at best prove to be only a short-term trading vehicle, and a stressful  one at that. Links to Stockcharts given below:

$NYAD:   http://stockcharts.com/freecharts/gallery.html?$NYAD
McClellan Oscillator:   http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=3&mn=0&dy=0&id=p83733137120
Russell 2000 Index ($RUT):   http://stockcharts.com/freecharts/gallery.html?$RUT
RS of $RUT to $SPX:    http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX
 

$NYAD, NYMO, NYSI & $RUT Sept 22, 2014

Obviously the $NYAD is really doing poorly and the relative strength of the $RUT vs $SPX is falling below its support,  nullifying what had been a potential base building process:

http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX

The $NYAD seems to be heading down for support at 101,400. If that is the case, it implies some extended down side action for the R2K and to a lesser extent, the market as a whole (and the $SPX):

http://stockcharts.com/freecharts/gallery.html?%24NYAD

The NY McClellan Oscillator could be trying to make a short-term double bottom around -60; if it does so that point would connect with the Aug 1 low of -90 to create a rising trendline. If the NYMO stays above that potential uptrend line, it would pull up the Summation Index as well. If the A-D line continues to decline sharply, the NYMO will fall below the -60 level and pull down the Summation Index below the 0 line. The Summation Index measures the persistence of the A-D line in a particular direction. A rising SI almost always means the market is rising and is an especially good omen for the R2K.