When the indicator turns yellow, it means hold the course but be aware things might be getting dicey. The indicator took a significant drop over the weekend, approximately 10 points.
In case you were following it.
Which means: don’t do anything rash, but keep an eye out. Ten straight trading days below the 75 threshold and it turns red.
P.S. I haven’t posted lately, because I have had no brilliant ideas. I might get brilliant again in the future though. Or at least have an idea.
05/31/ 16 update: it’s back to yellow.
The indicator has turned red. Which might seem strange since it was such a big ‘up’ day today. But none the less, we have had ten days where the breadth diffusion indicator has been below the 75 threshold.
The good news is that breadth seems to be improving. So it might turn yellow and then green again over the next month…who knows?
The “rules” of this “trading system” ** say buy at the next open after the first green day, and sell at the next open after the first red day, which is tomorrow. So I don’t know what the official return would be. But if you’d sold at today’s close, you’d be up a paltry 1.78% from the April 12th open. Which beats a kick in the teeth I suppose.
** not really a trading system. This is just a general market health indicator.
For the first time since developing The Indicator, it has turned green. FWIW.