Best Advance-Decline Line Since April And I’m Not Buying It

We opened on a positive 1,200 tick and I’m not buying it.

Best advance-decline line since April, ticks raging strong right out of the gate, and somebody out there is looking at that going, well, that’s bullish.

Think again.

Do not take the advance-decline line the wrong way. What you’ve got is full-blown correlation, and the second that showed up, all the sector rotations died out in seconds. Everything was silenced.

Now look at energy.

Oil was down 3.6% and the XLE was up $0.11 this morning. Would you expect the energy complex to be green at all with crude getting hit that hard?

It’s decoupling. 

The XLE is decoupling because the correlation to the S&Ps (SPY) is so freaking strong that energy quit following its own commodity.

So this isn’t a bullish or bearish indicator to me. 

This, for today, is about the market moving as a unit. Which means I’m going to fire first to the S&Ps and ask questions second, because the individual name is just along for the ride.

Rotations will come back. They always do. But while it’s this tight, hands and feet inside the vehicle.

One more thing on a day like this, and it’s the part that gets people hurt the most. 

Your stop-loss doesn’t work the way you think it does when everything moves as a unit. There’s no rotation to cushion you, so when it goes, it all goes at once, and that order you were relying on fills wherever it feels like filling.