January 15, 2026 Tom McClellan measures market after
Breadth new highs
We have just seen a new all-time high in the NYSE's daily
Advance-Decline (A-D) Line. It confirms the new highs in the
major indices, and that is a really good thing.
Years ago, I undertook a study to see what it means to have a
new high in the A-D Line. In order to increase my sample
size, I specified that it had to be just a new 3-year high instead
of all time, and then I looked at what the max drawdown was in the
SP500 over the succeeding 3 months. The recent decades'
results are shown in this week's lead chart.
The short version is that if you see a new A-D Line high, you
have pretty good assurance that the biggest drawdown you are likely
to see over the next 3 months is limited to about 10%. But
the big caveat is that you can throw this rule out the window if
the Federal Reserve or Congress puts a thumb on the
scale.
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January 15, 2026 Tom McClellan
Posted by rbreese on 15th of Jan 2026 at 03:59 pm
January 15, 2026 Tom McClellan measures market after Breadth new highs
We have just seen a new all-time high in the NYSE's daily Advance-Decline (A-D) Line. It confirms the new highs in the major indices, and that is a really good thing.
Years ago, I undertook a study to see what it means to have a new high in the A-D Line. In order to increase my sample size, I specified that it had to be just a new 3-year high instead of all time, and then I looked at what the max drawdown was in the SP500 over the succeeding 3 months. The recent decades' results are shown in this week's lead chart.
The short version is that if you see a new A-D Line high, you have pretty good assurance that the biggest drawdown you are likely to see over the next 3 months is limited to about 10%. But the big caveat is that you can throw this rule out the window if the Federal Reserve or Congress puts a thumb on the scale.