So this turns the 21 week moving average into an oscillator. Bull markets are typically defined by ranges between 0 and 60, while bear markets are defined by ranges between 0 and -60. The zero line is also very important. A healthy bull market will continually bounce off the 0 line and continue to range on the positive value part of the oscillator. The same goes with bear markets. It will continually fail at the zero line and range on the negative side of the oscillator.
The area between 20 and -20 is a key level to consider. Sometimes during the start of bull markets, the oscillator will fall below 0 and go to -20. The opposite is true for bear markets. This is key to understand because it does not negate the bull or bear case. It simply means that there is some ranging going on before the full trend change can take place.
Trend changes are shown when the oscillator rips through the 0 bound. Another great tool is the “Always Buy” and the “Always Sell” regions. I say "always" as a joke here because you should always use a weight of the evidence approach when analyzing the markets. These are areas above and below 60% on the oscillator. These are moments in time when the market has become so extended in one price direction that it “always” causes a trend reversal. Use this as a guiding tool to define bull markets and bear markets. Keep your head on a swivel!