Confirming index cycles with breadth, volume, and waves

A three-vote contract at an index high

Editorial framing: this article treats an index high as a confirmation contract with three votes. Daily breadth must match the price extreme. Short-horizon volume-price must still expand. A rebound after the first drop earns an Elliott-wave reaction label only if upside volume fails.

The notes below describe those checks as a historical workflow. They are not a claim that the same plot still behaves this way, and they are not a trading system.

How the advance/decline line is plotted

The daily advance/decline line is a running total of advancing issues minus declining issues. Percentage, unchanged-issue, and oscillator variants were tried and discarded.

The line and the industrial average are plotted in one frame. Each series is scaled from its period high and low and is rescaled when a new extreme prints. Non-confirmation, breadth-led advances, and weakening advances are then read visually.

Non-confirmation is an index period high or low that the advance/decline line does not also make.

A cycle-reset check for later highs

A numeric cycle-reset sets the line back to zero at a cycle start. It requires at least three consecutive days with more decliners than advancers. It then asks whether a later industrial-average high is matched by a new advance/decline high.

When the industrial average returns to a similar level several days to several weeks later, a higher advance/decline value is read as upside-cycle structure. A lower value is read as downside-cycle structure.

Why a long-running total is not a multi-cycle indicator

A long-running advance/decline total can remain negative while the industrial average is at a new high. That pattern is used to argue that the line is not a multi-cycle indicator and that it produces false negatives more often than false positives.

A working scale of about 600 advance/decline points per 1 percent industrial-average change is used to judge whether breadth has moved more or less than price.

Volume-price votes at highs and lows

Cycle lows are read from downside volume, the volume-percentage ratio, and a new-low indicator. Cycle highs are read from the volume-percentage ratio, a new-high indicator, and the advance/decline line.

The volume-percentage ratio is treated as a 50-to-75-trading-day companion, not as a long-horizon indicator.

A new-low reading of 10 or more that the index then pierces is treated as an upside reversal cue.

When a rebound is only a B-C reaction

A rebound after the first drop from a top that upside volume does not confirm is treated as an Elliott-wave B-C reaction likely to fail.

Editorial reading of the third vote: the rebound may carry a B-C reaction label only when upside volume fails. If upside volume still supports the bounce, the failure label is withheld and that vote has not gone against the intact-cycle story.