Hussman's Weekly Market Commentary - The Information is in the Divergences
Hussman Funds - Weekly Market Comment: February 13, 2006 - The Information is in the Divergences:
"Though the general character of market action in recent weeks has not been too bad, the NYSE advance-decline line (a running tally of daily advancing issues on the NYSE minus declining issues) has appeared out-of-place in the context of other measures. To get at what's happening internally, it's instructive to compare the overall NYSE advance-decline line with the advance-decline line of the 30 stocks in the Dow Jones Industrial Average, as well as the largest 30 stocks in the S&P 500 Index...
Notice the divergence that's been developing since last November. For the past several months, we've been seeing fairly persistent distribution in the largest, most highly capitalized stocks in the market, with trades in these large-cap stocks occurring on weak or subdued breadth. Evidently, the enthusiasm of investors for more speculative, smaller capitalization stocks is not reflected in the core issues that comprise the stock market."