One of the great things about market breadth is that over and over again it warns when a rally is weakening. It usually takes more than one warning before a pause becomes a fall but…
Actually, it usually it takes three and we are at two early warnings now.
See the red circles on the chart below, both past and present. And note how often they are the precursors for sell-offs to come. Sometimes this trading and investing is simpler than most analysts and Wall-Street players would have to common man believe. But one must take heed.
Not saying this rally is over. In fact, it is just the kind of rally (like the Brexit rally last summer) that can go on confounding bears and confounding indicators as it rides waves of too easy money, a seasonal bullishness, and like all bull markets the tendency to go up until it stops going up..
But the warnings are here now and beginning to repeat so this is becoming a time to take some profits or to tighten stop-loss points to make sure not too much is lost when a serious tumble finally takes hold.
(click on the chart for larger view)