The second set of charts show both the Feb decline and the July decline. Both time periods had the S&P/EURO making it's high before the S&P made it's intermediate top. The Feb time period had a lead time of just less than 3 weeks while the lead time to the July high was approximately one month.
The last two charts cover the current time frame. The very short term divergenge isn't that great, but when looking back to June it is very glaring showing the main impedence of the S&P advance is currency devaluation. If you have been making money you still get to go to the bank and cash the checks, so that's not my point at all, but when on a short term basis the devaluation is taking place faster than the S&P is going up, then risk is rising. When you throw in some technical deterioration and some fairly high put call ratio's, using option clearing corp numbers for opening buys, then it's time to be careful. This is not an ultra short term timing tool. Personally I have no positions right now but am looking to short in the next two or three days if we can get a rally to 1550 to 1560 cash. If we don't get a decent sized decline next week then a move into the 1600's and higher is probable.
Looks like I didn't get the full sized charts. Sorry about that.
Edited by Spectacular Bid, 18 October 2007 - 10:58 AM.
