Forecast is for rain (market top)
Chart shows SPY (2D) and the percentage of stocks above their 20DMA(aqua) and 200DMA (yellow).
Each series is the mean percentage of 7 index's which, in turn, aggregate several thousand underlying stocks. The 7 indexes: S&P, Dow, Nasdaq, Russell, TSX, NYSE, AMEX
The peaks of the index coincide with market tops (as shown in the chart). Based on this pattern it's reasonable to forecast a top. Like the weather forecast, the timing is uncertain, the underlying averages lag, and their are plenty of false positives**.
Current forecast is for rain.
** Why do we listen to a weather forecast that we know is somewhat inaccurate? Because it's useful in answering questions like: "should i take an umbrella with me today?" **
All models (and indicators) are meant as useful approximations of reality.
Each series is the mean percentage of 7 index's which, in turn, aggregate several thousand underlying stocks. The 7 indexes: S&P, Dow, Nasdaq, Russell, TSX, NYSE, AMEX
The peaks of the index coincide with market tops (as shown in the chart). Based on this pattern it's reasonable to forecast a top. Like the weather forecast, the timing is uncertain, the underlying averages lag, and their are plenty of false positives**.
Current forecast is for rain.
** Why do we listen to a weather forecast that we know is somewhat inaccurate? Because it's useful in answering questions like: "should i take an umbrella with me today?" **
All models (and indicators) are meant as useful approximations of reality.
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