Doing some basic back testing on SPX & MMTH (% stocks above 200dma) we can see this rare signal has only triggered a few times since 2000 coming off significant bottoms. The previous two times the market came off an extreme low on MMTH to an extreme high the market remained bullish for about 9 month before a longer multi month correction occur with a 10-15% draw down. Based on this history we could expect the S&P500 to hit between 4300-4600 by late summer. During this period it would be very normal to bull pack to the 13WMA or even the 20WMA
Comment:
MMTH corrected right as the back testing suggested but the market correction was basically invisible.