My early warning indicator can offer warning signals well in advance of market turbulence. It can also help on the long side by giving confirmational signals when in agreement with a trend. It recently had a negative cross and is enough for me to raise an eyebrow and err on the side of caution. There are times when a signal crosses negative only to return positive..i.e. a false signal. It is useful, however, after a very strong trend (like we have seen over the last year and a half) and it turns down sharply. Take a look at the vertical lines for examples and take note of the one in January 2020. The signal crossed over bearish and the market sold off. Then the market found support and made a new high but the signal was still under the crossover (negative) and we had an incredible crash. I have no idea what will happen but it is certainly possible we could see a repeat of that.. I'm watching for the following:
a) a sharp selloff followed by a sharp bounce followed by a crash (like what unfolded Jan 2020-March 2020)
b) just a sharp drop... i.e. flash crash (but perhaps not a major top)
c) a false signal and another sideways consolidation and period of noise
Who can say? Just be careful out there, measure your risk to reward, and study. Speculate less. Study more. Also consider looking down when others are looking up... look up when others are looking down.