Above and below: 2 minute bars of Monday's Qs and the NYAD.....
Monday's trend down day provides a classic example of why it's important to closely monitor the NYAD in real time in conjunction with price charts.
Many traders were looking for reversals off S2, S3 and S4 levels as prices continued to crumble throughout the day... and there were several occasions when it looked like pops in the TICK and TICK volume were going to signal some midday recovery.
Those that followed the NYAD, however, were not misled by these little feigns and head fakes as market makers tried to draw in buyers. With the NYAD refusing to budge above .12 even in the face of otherwise apparent rallies, and in fact spending most of the afternoon at .10 or below, there were few odds favoring an afternoon reversal.
As I have mentioned MANY times before, I regard the NYAD as one of the most important indicators in my daytrading toolbox and yesterday showed why.