[US Stocks] Market anomalies indicated by the Advance/Decline Line. Weakness progressing behind the stock indices

Hello! I am TAKA Chan, an individual investor and former hotelier.

This time, I checked the Advance/Decline Line for the US market as of October 23, 2026.

In conclusion, the US stock market is not as strong overall as the levels of the major indices suggest.

What is particularly concerning is the weakness in small-cap and micro-cap stocks.

■ What is the Advance/Decline Line?

The Advance/Decline Line (hereinafter, AD Line) is an indicator calculated by subtracting the number of declining stocks from the number of advancing stocks and accumulating the difference.

• Rise: Advancing stocks are dominant

• Fall: Declining stocks are dominant

• Stock index is high but AD Line is falling: Possibility that gains are concentrated in a few stocks

In other words, it is an indicator to check the internal strength of the market that cannot be seen from stock indices alone.

■ What we can learn from this chart

Please take a look at the two images.

What I want to highlight is the weakness in the NASDAQ Composite, Russell 2000, and Russell Microcap.

While the NASDAQ Composite Index had moments where it hit new highs from summer to autumn, the AD Line continued to fall.

This suggests the possibility that many stocks were not participating in the index’s rise.

Also, in the Russell 2000 and Russell Microcap, both the stock index and the AD Line are falling.

It is clear that weakness is spreading across small-cap stocks.

What I am concerned about

What I want to be cautious about in the current US market is that while some large-cap stocks are supporting the indices, many stocks are failing to keep up with the rise.

Looking at the current AD Line, movements confirming that concern can be observed in multiple indices.

If the large-cap stocks supporting the indices start to be sold off, it could lead to a decline in the entire market.

However, one cannot judge that a crash is imminent based solely on the deterioration of the AD Line. In fact, stock indices can continue to rise even when the AD Line is weak.

Moving forward, I would like to check whether the AD Line recovers, along with the content of corporate earnings.

■ Summary

What can be seen from this Advance/Decline Line is the internal weakness of the US market.

In particular, a weak state has already been continuing for small-cap and micro-cap stocks.

Just because stock indices are rising does not necessarily mean that the stock prices of many companies are rising.

What I think is important is not just the height of the index, but how many companies are participating in that rise.

Do not judge that the entire market is in good shape by looking only at the surface of stock indices.

I will continue to carefully check earnings and internal market movements.

*Analysis is based on charts provided as of the close of the US market on October 23, 2026. Since the AD Line values differ depending on the target stocks and calculation methods, I am focusing on the direction of each index. This does not predict or conclude future stock price declines.

I write notes for investors. Except for some analytical articles and earnings-related content, they are published almost for free.