I posted this in Feb and appears to have played out (updated chart attached).  To refresh it uses $A gold as an indicator of tops (by drawing line from previous peak through minor peak to intersect with rising trendline).  There is some method in the madness in that $A gold usually rises exponentially when the market falters as gold is considered a safer alternative but more importantly that the $A is considered a risk currency.

I guess the worry is that it has not signalled a bottom (i.e. green lines) yet!!  Need a spike in the MACD above 5 then back below or at least a some sort of spike - maybe the market rally's again like the last few times as shown in the second chart of the the S&P500 which shows every shot across the bow has been followed by a second chance (relief rally). 

Food for thought but this has played out four times now.............

This may be worth following again in the future - I posted this in March and it looks like it played out......so far anyway.

How often has this happened - i.e. where the NYSI has a heart attack on the way up - is this a worrying sign?

This has worked consistently well.  I've posted it once before but thought I'd post it again.  $A gold works inverse to SPX.  In a crisis gold often rises and $A falls causing big spikes.  By simply drawing lines from previous larger spikes through smaller subsequent spikes down to the rising trendline it has been awesome at picking tops.  This measure to May 2012 - sell in May!!

PS: Forgive my basic charting - i.e. BigCharts

Note we are at a similar point in the past (i.e. 1932 and 1974) when stocks broke out and really took off?? Perhaps without QE 1&2 the rally may only just be starting??

Assuming most markets look the same? Is this the real story as no currency debasement?  They look remarkably similar to me or is this comparing apples with oranges?

This has been working well at picking major tops and bottoms - perrhaps Steve/matt can make it look prettier as I've just cut and paste into paint as I don't have fancy software.

Top - by drawing a line from the major peak through the secondary peak down to the rising trendline

Bottom - when $A Gold MACD has crossed above 5 then crossed back down

Target for next major correction is April/May 2012 - sell in May?? Facebook IPO??.  I think it has some merit given $A is considered a risk trade and gold some sort of safe haven.

Be interested in any feedback.

Being in Australia I follow $A gold and it has acted as a great indicator as it has an inverse relationship to the market as $A has historically been considered a risky trade. 

I still haven't worked out how to load an image on this site but will email a pdf to Stev/Matt and see if they can reproduce it.

Thanks Matt much appreciated!!

Is it just me or does that top indicator you have there look like a mini-me to the actual GFC??

I subscribe to Lowry's and they have said the current rally is weakening and more than likely we'll revisit the August lows.

Does anyone have any long term charts on the McClellan Oscillator as I only have this one:

http://www.mcoscillator.com/market_breadth_data/

What worries me is that it appears to have risen so sharply that it already appears to be close to a top.  Having only just started to use it I am not sure if this is a bad sign (i.e. markets set to tumble again) or if markets can still go higher for longer even though this has such a high reading?? 

The super rich (and soveriegn funds) will have nowhere to hide soon.  Their the ones who must be sh!tting bricks.  It's one big game of poker coming up.  That's why artwork and rare diamonds are going through the roof as well as gold.  people are running out of options to store their wealth.  Perhaps they could buy real estate on Mars.

I am small enough to just stay in cash and gold. If I had a trillion to invest there's not many places I can hise other than the bond market. Here's good article by Martin Armstrong on why bonds rally.....

http://www.martinarmstrong.org/files/Why%20Bonds%20Always%20Rally%2008-01-2011.pdf

Because its the biggest and most liquid market and opne of few alternatives when you are trying to protect huge wealth be it soveriegn or personal

Thanks that's a much clearer picture which seems to validate a downtrend has started

I notice in the downtrend in 2008 the NYSE was flat at the bottom (and pointy at the top) and then during the rally it was been flat at the top (and pointy at the bottom).  It has now gone flat at the bottom again.  I am assuming the end it is flat at also has the most pressure which would currently mean selling pressure has increased significantly? Can anyone verify whether this is a good sign of a trend reversal as I don't have and history of this indicator.

I like it!!  Will also end up being the mother of all double bottoms!!

could also be a massive inverted H&S!!