Investments, tenth edition

 Figure 12.5 

Market Diary   

 Source:  The Wall Street Journal Online,  August 27, 2012. 

Issues

Advancing

Declining

Unchanged

Total

Issues at

New 52 Week High

New 52 Week Low

Share Volume

Total

Advancing

Declining

Unchanged

NYSE

1,455

1,553

105

3,113

104

17

1,944,911,334

852,581,038

1,058,312,638

34,017,658

Amex

200

202

22

424

3

7

48,215,758

18,651,981

27,715,823

1,847,954

NASDAQ

1,176

1,274

112

2,562

56

31

1,112,153,552

521,407,205

579,005,241

11,741,106

3:31 p.m. EDT 08/27/12

Trading Diary: Volume, Advancers, Decliners

Markets Diary

  Day  

  Advances  

  Declines  

  Net Advances  

  Cumulative Breadth  

 1  

1,302  

1,248  

54  

54 

 2  

1,417  

1,140  

277  

331 

 3  

1,203  

1,272 

  2 69 

 262 

 4  

1,012  

1,622 

  2 610  

 2 348 

 5  

1,133  

1,504 

  2 371  

 2 719 

  Note: The sum of advances plus declines varies across days because some stock prices are unchanged.  

 Table 12.1 

 Breadth 

bod61671_ch12_388-413.indd   404

bod61671_ch12_388-413.indd   404

7/17/13   3:46 PM

7/17/13   3:46 PM

Final PDF to printer

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  C H A P T E R  

1 2

  Behavioral Finance and Technical Analysis  

405

Remember, however, that for every buyer, there must be a seller of stock. Rising volume in 

a rising market should not necessarily indicate a larger imbalance of buyers versus sellers. 

For example, a trin statistic above 1.0, which is considered bearish, could equally well be 

interpreted as indicating that there is more  buying  activity in declining issues.  

  Confidence Index   

 Barron’s  computes a confidence index using data from the bond 

market. The presumption is that actions of bond traders reveal trends that will emerge soon 

in the stock market. 

 The     confidence  index   

 is the ratio of the average yield on 10 top-rated corporate 

bonds divided by the average yield on 10 intermediate-grade corporate bonds. The ratio 

will always be below 100% because higher-rated bonds will offer lower promised yields 

to maturity. When bond traders are optimistic about the economy, however, they might 

require smaller default premiums on lower-rated debt. Hence, the yield spread will narrow, 

and the confidence index will approach 100%. Therefore, higher values of the confidence 

index are bullish signals.   

 Yields on lower-rated debt will rise after fears of recession have spread through the economy. This will 

reduce the confidence index. Should the stock market now be expected to fall or will it already have fallen? 

 CONCEPT CHECK