One of my favorite emails to get each week is the Chart in Focus from Tom McClellan. Each week Tom often takes a unique look at different markets and overlays. This week McClellan takes a dive into why when looking at the Advance-Decline Line we use NYSE data vs Nasdaq data. Tom poses the question, “When was the last time that the Nasdaq A-D Line made a new all-time high?”
Here’s Tom’s answer:
NEVER. It started going downward from the beginning of the reporting of Nasdaq market data in 1971, and has never made it back to that start point.
…….
Part of the reason for this is that a lot of the lower grade public companies get listed on the Nasdaq, where they remain active for a while before getting delisted. If a company is going to IPO at $20/share and then go broke, it is more likely to do that on the Nasdaq board than on the NYSE. And every day that it spends going downward from that IPO price to delisting contributes to the Declines column.
The Nasdaq market has long been considered the “minor leagues” for listed companies, where easier listing standards made it possible for innovative new companies to come public. For a long time, it was seen as a mark of success for a company to graduate up to the “big board” and switch its listing to the NYSE. That has changed some in recent decades, as tech giants like Microsoft, Intel, and Oracle did not want to be seen as abandoning their innovative roots, and they were enticed to remain on the Nasdaq.
Maybe it’s just me but I find this pretty interesting.
Source: Nasdaq A-D Line Does Not Work As Well (McOscillator)
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