Back in early March of 2009 I wrote about why I like to use Tom DeMark's Sequential Indicator. At the time, the daily, weekly and monthly charts had lined up suggesting that a stock market bottom was imminent. Stocks literally bottomed within a day or two of that post.
Interestingly, the very same indicators now suggest this rally may have run its course. The daily chart of SPY below shows that since early February we have a completed sell setup (which I fudged just a bit; the 9 on 2/23 is not really valid but I'm using it anyway) and a sequential 13 sell signal completed yesterday:
With this week's trading the weekly chart has also completed both a sell setup and sequential 13 sell signal:
And finally, the monthly chart completed a sell setup back in January that is still in effect:
So through the lens of the DeMark Sequential signal, stocks are at risk of putting in a major top right here, right now.
Disclosure: long SDS
To learn more about DeMark indicators including the Sequential indicator I highly recommend picking up a copy of Tom's book, “New Market Timing Techniques.”