This may be a naive comment, but does increased investor interest in index funds and ETFs make the argument that market tops can be identified by the A/D line diverging from market indexes less compelling? The divergence case depends on investors picking stocks - the "best" stocks - near a market top as most other stocks languish (driving the A/D line sideways or down while the indices continue to climb). But if most investors are just buying the index doesn't that just continue to drive the A/D line up too? Both the index and the A/D line keep going up until they can't anymore. Unfortunately I have no idea how to research this to prove it one way or the other, but would welcome feedback.

My model shows that once the QQQ makes a 52 week high in the next 3 weeks the top will be in. Tech calls the top, not the SPY, IWM or DIA..

Peter, take a look at this article regarding NYAD divergence. Apparently it's not necessary for a major top. https://seekingalpha.com/article/4124142-nyad-challenging-myth

I guess we pulled several years of forward consumption to the present day by selling a lot of bonds to print dollar bills. Once all the indexes top, I hope the bottom is sooner than 4 years, but we will see. Thanks again

Hi Peter, What does the other offsets say for the $COMP, are are there any other oustanding projections?

Wonderful! This Friday is Quadruple Witching for the markets! Now I'm as nervous as a cat on a hot tin roof! lol Thank you for sharing your work Peter

Question Peter when you can. You're discussing targets on the Weekly offsets that are very close to being met, but we have very high success rates (90+%) on the Daily targets whose lower ranges begin much higher than the lower beginning ranges on the Weeklies. For example, you mention the weekly 20 Week offset SPX as a 3954 starting point (33,195 on the DOW), but on the Daily 96.8/110.6 offset the lower band begins at 4150 (and 34,153 for the DOW). Per SPX, this daily offset is 100% over the past 5yrs (3/3), 100% over the past 10yrs (6/6) and 91% over the past 25yrs (going back to January 1997 for 20/22). Similar scenarios exist with the COMP as well.

My question is a more holistic one. How do you reconcile the difference in targets between the Daily offset and Weekly offsets? Do you give the longer term offsets (ie the Weekly) more weighting and respect versus the short term, or would you emphasize the Daily offsets the same (or perhaps even more)? I ask because the longer term weekly offsets suggest the possibility that we've met all the criteria, but the shorter term Daily 96.8/110.6 suggests more is to come. With such high success rates existing, your thoughts on how you approach such a condition is appreciated. Either way, we're potentially threading the needle here!

Also, Heinz75 - that's an excellent question and while hard to determine it's a great point to bring up. With passive becoming so dominant, it's very relevant. What has me worried is that everyone and their mother (me included here) are looking for this traditional A/D divergence to send the smoke signal. The growing dominance of passive flows may have the potential to distort this timing metric. Unfortunately I don't know how to measure this either, but I'm worried that you're potentially on to something.

I think XLF is a critical component that's missing from these analyses. XLF is literally keeping SP500 afloat as tech struggles with bond sell offs. TLT and /ZB are so oversold I would imagine a large rotation from XLF to NQ that will bring SP500 to the 4200 target is around the corner. Only other scenario I see at the moment is a slight downfall due to XLI and XLF being overstretched and then a rotation into tech - this scenario might allow the AD line to drop and hit a double top.

Peter, I came across a good A-D line study by Lowry Research from April 2019. It noted that of all bear markets of the last 90 years, there were two that did not start with an A-D line divergence. They were the May 1946 top (24% decline), and September 1946 (27% decline). So, it's rare but has happened.

FWIW Another analyst I follow who has been around a long long time and has a very good track record stated that this week he is going to 100% cash. This is the first time he has done this in over 10 years. Seems to be like the general sentiment of many investors is that market and Bitcoin will explode higher from here. This too has me thinking we are close to a top.

My two cents on the AD line divergence vs SPX price action acts as a “pre warning” signal of imminent major correction: hasn’t the cumulative AD line made a all time high right before the “major” crash in Feb/March 2020? There wasn’t any divergence between AD line and price action, IMO. Hence, using this example that everyone of us can remember (and let’s not forget it’s the biggest drop in price since GFC), we must take the divergence theory with a pinch of salt. Comments most welcome.. maybe I missed sth here, pls correct me. Thanks

My two cents on the AD line divergence vs SPX price action acts as a “pre warning” signal of imminent major correction: hasn’t the cumulative AD line made a all time high right before the “major” crash in Feb/March 2020? There wasn’t any divergence between AD line and price action, IMO. Hence, using this example that everyone of us can remember (and let’s not forget it’s the biggest drop in price since GFC), we must take the divergence theory with a pinch of salt. Comments most welcome.. maybe I missed sth here, pls correct me. Thanks

Hsiang76 said:

My two cents on the AD line divergence vs SPX price action acts as a “pre warning” signal of imminent major correction: hasn’t the cumulative AD line made a all time high right before the “major” crash in Feb/March 2020? There wasn’t any divergence between AD line and price action, IMO. Hence, using this example that everyone of us can remember (and let’s not forget it’s the biggest drop in price since GFC), we must take the divergence theory with a pinch of salt. Comments most welcome.. maybe I missed sth here, pls correct me. Thanks

But Hsiang, I'm talking about a major high, and although the decline from Feb 2020 was dramatic, 4 months later the market was at new all-time highs. Yes, there have been intermediate term highs where there was no a-d divergence, but I am not looking for that here. I am looking for a very major top!!

His big video must have gone on YouTube. Lots of random comments and questions.