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Completing a Market Top

By Dick Arms

 About this article:
 The flip-flop action continued yesterday, keeping the averages within the trading range. We are again nearing the top of the area that I have been suggesting may be the right shoulder of a head-and-shoulders top. We see that on the first chart, below. One factor on this chart is the MACD across the top of the chart. It crossed to the negative side about two weeks ago, suggesting that the market advance going back to March has ended. The second chart is a measurement we first looked at a few weeks ago. It shows us the comparison between the Arms Index on a 21-day basis for the NYSE and for the Nasdaq. At this time we have the red line, the Nasdaq, far above the blue line, the NYSE. That usually is seen in a market that is making a top rather than a bottom. The...

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