Warning: S&P 500 Makes New All-Time Highs, Advance-Decline Line Falls

Negative divergences are everywhere on the S&P 500 and the NASDAQ 100. One of the major indicators of underlying weakness in the S&P 500 is the advance/decline line.

The advance/decline line shows how many stocks are rising vs. how many stocks are falling. This is a way for technical investors and traders to measure the overall health of the market. An rising advance/decline line with a market that is moving higher shows wide participation in the rally. A falling advance/decline line with a rising market shows low participation in the rally.

Currently, as seen in the chart above, the S&P 500 is making new all-time highs but the advance/decline line has been falling. This tells investors that the market move higher is a select group of stocks, namely the trillion-Dollar names.

Historically, it foretells a market decline.