NYSE Summation Index Chart Signals Top

Once again the NYSE Summation Index Chart is signalling a top in the markets via the bearish cross. Below I’ve highlighted all the most recent times the NYSE Summation Index has given this bearish cross – all but 1 of the past 6 have been major short term tops in the market.

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What is the NYSE Summation Index right?

The Indicator uses the advance/decline ratio with a stochastics overlay. Signals are based on a simple crossover of the 5 week and 3 week Stochastic once it hits extreme levels. Of course no indicator is 100% accurate 100% of the time. However this particular indicator has historically been fairly accurate, and when the indicator hits certain extremes on the stochastics, it is often a good time to start hedging positions that are going against the direction of the indicators. Remember, the extremes are where you are wanting to pay the closest attention to, particularly where the %K & %D lines cross (i.e the red and black lines).