Swings from excessive and sentiment have been a good contrarian market indicator for the past 6 years. Every time the indexes of stocks above or below 200-days Average reached an extreme of 90-100 percent a correction in SP500 was close.
Instances where the index started falling, diverging away from the SP500 index (indicating internal strength is weakening) were signals, as at least a hefty correction followed. The chart below Illustrates these divergences, where periods of prolonged divergence followed by a more sever downside move, while minor divergences followed less severe corrections.
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