![\"Line](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2025\/08\/2025-08-11-SP500-Tageschart-1024x624.png\")
Advance Decline Line takes a breather<\/h2>\n\n\n\n
In the current year, the Advance Decline Line has once again proven to be a leading indicator with an exceptionally high hit rate. Both in terms of the long-term picture and in the short to medium term, the signals of the AD Line should therefore be heeded. <\/p>\n\n\n\n
The most recent breakout in the S&P 500 (end of July) was only narrowly confirmed by the AD line, which was already an initial warning signal that the index could also enter correction mode in the short term. If a sustained signal emerges in the Advance Decline Line in the coming days or weeks (breakout above the last high or below the last low), this is very likely to trigger a move in the S&P 500 in the same direction. If, on the other hand, the S&P 500 index were to break out to the upside without confirmation from the AD line (bearish divergence), there would be a high probability that this was a false breakout.<\/p>\n\n\n\n Despite some macroeconomic uncertainties, the US corporate landscape is proving to be fundamentally extremely robust. In the current reporting season for the second quarter, the vast majority of S&P 500 companies are beating analysts' estimates. By the beginning of August, around two thirds of all S&P 500 companies had presented their figures. 82 % of the companies reported higher profits than expected. This figure is well above the 5-year average of 78 %. The cumulative increase in profits is likely to be around 10-13 %, after only around 5 % had been expected before the start of the earnings season. This would mark the third consecutive quarter of double-digit profit growth. <\/p>\n\n\n\n Shares from the technology and communication services sector in particular shone with positive surprises, led by the \u201eMagnificent 7\u201c. However, sales increases are also evident in broader sectors: A total of 79 % of companies exceeded their sales expectations. On average, turnover rose by around % compared to the previous year. Despite tariffs and higher costs, business is therefore still going surprisingly well. Many companies have so far been able to avoid price increases as inventories were built up in the first quarter. At the same time, the AI boom is fueling the tech sector and also pulling the broad market upwards. Heavyweights such as Microsoft and Meta once again reported strong growth. This strengthens confidence that the upturn is based on a solid foundation. <\/p>\n\n\n\n However, US equities are no longer cheap: at around 22, the forward P\/E ratio of the S&P 500 is well above the 5-year average of 19.9. The high valuation is only likely to remain justified if the earnings momentum continues and the macroeconomic risks do not materialize.<\/p>\n\n\n\n Although August and September are statistically rather weak months, the market is currently remarkably stable. A brief breather or a correction of a few percent would therefore not be unusual, especially if the market breadth were to weaken in the short term (e.g. weaker Advance Decline Line). However, actively shorting the market in this environment is not a good idea: overall, we are still in a historic bull market in which setbacks tend to be bought.<\/p>\n\n\n\n![\"A](\"https:\/\/www.captrader.com\/wp-content\/uploads\/2025\/08\/2025-08-11-AD-Line-1024x446.png\")
Strong reporting season underpins upward trend<\/h2>\n\n\n\n
Seasonal headwinds remain possible<\/h2>\n\n\n\n