More cool SlopeCharts news! We have added a new data panel called Statistics, and it is jam-packed with information.
For me, the most important item is that the very top: the A/D Accumulation. This measures, over time, the accumulation of advances minus declines. Since the market tends to go up over time (particularly over the past decade), it has been climbing steadily for a very long time. It wasn’t always this way, of course.
The key is to look for divergences. For example, look what was happening in 2007. The blue line, representing the SPY, creating a higher high. Just beneath it, the A/D line, there was a lower high created. In other words, a major divergence! We all know what happened next, and those honed in on this simple insight were able to basically short the market at the top.
More recently, a similar divergence took place late in the summer of 2018. This preceded the last meaningful drop in the market, which was in Q4 of 2018.
Although the timespan isn’t as large, I wanted to point out that we recently had a similar divergence. The SPY, represented by the blue line, painted out one higher high after another. The A/D, on the other hand, as shown via the blank line, traced out a lower high, represented by the red line I have drawn.
Statistics are Here