On February 17th, we got a signal from Matt’s Breadth Indicator (aka “The 30% Up/Down in a Quarter Diffusion Index”…can you see why I just called it after myself?) to get the heck out of the market. Or at least to put on our Danger Spectacles and tighten your Volatility Helmets. You would be excused a week later for asking what the problem was. The problem of course manifested itself shortly thereafter. We are now into a second period of closing below our initial “get out!” period.
See? The indicator told you so. Even when the S&P 500 seemed to be saying otherwise.
Does this mean the markets are going to drop to the ground like some bunker-busting price-bomb? Er…I dunno. It’s just an indicator, not a prognosticator!