The concept here is that overbought conditions tend to get more overbought signals in bull markets. And that overbought conditions tend to be good sell signals in bear markets.
So, if this is a bear market, then this is a good area to sell short EEM and go Long SPY for a few percent return in the next few weeks. The chart speaks volumes about where Emerging Markets are relative the S&P500 and it could very well be that EEM is about to embark on a multi-year outperformance of the SPY to the tune of 50%, which would drive this ratio from 22 up to 33.
I have enclosed my other charts that relate to this same idea and the forecast for the DIA for 2014 from the turn of the year also.
Tim 11:51AM EST 5/12/2014