darex, if there was no divergence noted in the charts. and the aug low was the same level and the nov low. A bear argument would of been that the rise in prices was a short term correction to a bear market. There would of been no way to tell which story was correct with out the confirming divergence.

We are at/near profit taking on the rally, but as mo points out, its much harder to use these charts at the top. Never underestimate the level that new money will raise the market higher than sell signals. There is plenty more upside on all the charts as any market breadth expands on med to long cycles. A short side profit taking correction should lead to more up, long as it is not extreme and many days (both conditions). There is the possibility of a long side head and shoulders setting up in the S&P (bear).

I wish i knew what Jan brings us. Very hard to get a solid read. I am biasing to ranging market for jan, only cause i cant tell. Charts are not saying what is what yet.

You’ll hear me begin to say that the market is overbought when this indicator is at least one standard deviation above it’s 3-year mean, but this does NOT necessarily mean that the market will decline. It just means that the probability of a decline will begin to get bigger as time goes by.

The majority of market indicators are much better at picking bottoms than tops. Rising and declining markets are not two sides of the same coin.

Really like the website by the way!

When you say the divergence between aug and nov lows do you mean they both have similar divergences between % above 50 day and S&P?

Also when you say you could build a similar bear argument - what would that be and why do you disagree with the bear argument that you could posit?

What i like about this chart is the divergence bettween aug lows and nov lows. Historical divergences in MA at extremes, show strong price follow through. This can be confirmed on similar charts available here.

I am simplifying, a full contextual understanding of price and trend is important to apply this divergence, especialy at overbought in a bull market.

this chart tells a thousand stories, i love it!