The AD line topic has been beat to death for many years, but for those willing to decompose the NYSE issues into common stocks, preferreds, REITs, bond CEFs, non-bond CEFs, etc, there is considerable utility in monitoring NYSE component AD lines. The value of the NYSE AD line can boiled down to a few words: measure of liquidity.
The link Fib provided earlier in this thread illustrates the value in decomposing the NYSE membership into various groups. Many of us, including Fib, the McClellans, and many others have studied NYSE AD lines (keep in mind the all-time high for the NASDAQ AD line was posted in 1972) and it does an excellent job in measuring the health of market liquidity.
IMHO (and Tom McClellan's), the bond CEFs are *the* canary in the liquidity coal mine. We like to hear the constant banter of "the NYSE AD line is useless due to the pollution of preferreds, CEFs, etc in the composite AD line". Such comments keep the majority from investigating what is really going on beneath the surface.
The NYSE bond CEFs can be broken down into three categories: corporate bond CEFs, state municipal bond CEFs, and national municipal bond CEFs. The NYSE corporate bond CEFs can be further decomposed into investment grade bond CEFs and High Yield (junk) bond CEFs. I feel the junk bond CEF AD line is a very useful tool for keep the intermediate to longer term trader/investor on the right side of the market.
The below chart of the junk bond CEF AD line illustrates such:
FWIW,
Randy