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Looking back at 1987 - 1991

I've zoomed in on my previous 20+ year breath chart to this period to see if the danger indications were false alarms that would whipsaw me out of investor positions - with the inherent cost implications, or whether they were good indications to get out.
   
Note, no new highs minus new lows data for this date.

1.  Not apparent on this scale, but two weeks notice before the drop.  Excellent.

2. The temptation, as we know what happened in October, is to state that this is a valid forewarning. It triggered after an initial price drop. Weinstein Momentum is flatish after a fall and slight recovery, % above the 200 day EMA is in the bullish area but has dipped from overbought (> 70%).  To soon to know that price and the a/d line would diverge, the a/d line had not yet failed to make a higher high.  Likely a reasonable call based on information presented. 

3, 4 & 5.  Index was going sideways at 4 & 5.  Was 3 a good indication of that to come or a false alarm?  The danger here is that these could just be artifacts of the calculations if you look closely at the Weinstein momentum perhaps the averages are not true at this point?

6, 7 & 8. The alert occurs on the day, i.e. after the end of day data has been collected on a 6% pullback, which is noteworthy in itself.  7 is well into stage 3 and 8 in stage 4.  Really 6 trumps 7 and 8 as you should be out.  However, I do note my aggregate indicator noting a few times to buy.  Perhaps that would case a few whipsaws.

9 & 10.  These are on the climb out from the crash.  Knowing that we know now you'd want ot stay in here.  The 150 day MA only turns up at 9.  Are these false alarms?


With trader positions you'd be in and out quickly, I think on balance these danger indications would work for an investor.  But I need to take care saying that, as of course I'm likely to be biased for my own breadth overall scoring system.