Reading Advance-Decline with Price
How to keep the advance-decline line honest when the index makes a new high on thin participation.
Index highs on a weak advance-decline line are a classic warning, not an automatic short. Breadth divergence tells you participation is narrowing; it does not time the turn by itself. Pair the reading with the index structure and with up/down volume so you are not reacting to a single series.
A useful habit: plot the advance-decline line beside the index on the same higher timeframe you use for bias. Note whether new index highs arrive with new breadth highs. When they do not, reduce expectation for continuation trades and demand cleaner volume confirmation on individual names.
In the Market Breadth Lab we annotate a month of sessions this way. The goal is a written weekly note — broad, narrow, or mixed — with the invalidation that would change it.