How To Spot a Market Peak

CME:SP1!   S&P 500 Futures
How to spot market peaks using Advance/Decline ratio (ADR)?

First, look for divergence between the market and the indicator. Rising market index accompanied with declining number of advancing stocks means upcoming drop . Second, look for high readings of the ADR. Values above 3.5-4x to be considered as significant.

I've done some back testing, which showed pretty interesting results. Here they are:
o It is most likely to see ADR higher than 3 during first quarter of the year. Usually that is February or March as it happened in 2010, 2012 and as it seems in the current 2014.
o After the peak in ADR with values > 3.5 the bull market continues 40-70 more days before correction occurs (see 2010, 2012).

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