SPXA150R S&P 500 Stocks Above 150-Day MA Weekly Chart

Stock market topping behavior is identified with the SPXA150R which is the percent of stocks in the S&P 500 above their 150-day MA's. When the SPXA150R tags 75 and higher, the stock market is in a topping process. Each move higher brings the downside drop in equities closer. The red circles show three key highs over the last 1-1/2 year. What do you think will happen going forward?

If you like to sell short, you are salivating as the SPXA150R moves higher above 80, perhaps 85, maybe tagging 90. Keystone calls this activity the "bet-the-farm indicator" since a reading above the 85 to 90 area is the closest thing to a guaranteed short that exists in the stock market. If the SPXA150R moves above 85-90, it is virtual lock that in the weeks ahead the SPX will be far lower. It's easy money.

After a washout, such as the Fall 2018 crash, the SPXA150R will of course fall with the broad stock market. When the 30-35 level is breached, the stock market is setting up for a significant bottom. Last year, that bottom was Christmas Eve (green circle) and you can see the SPXA150R bottomed about the second week in December a week or two ahead of the actual bottom in the S&P 500. When the SPXA150R drops below 20, that is the bet-the-farm signal for the long side since the selling is way overdone and the baby is thrown out with the water; there is blood in the streets which is the best time to buy.

The SPX prints an all-time high at 3018 on 7/15/19. The SPXA150R prints a high a smidgeon over 80 on 7/5/19. The SPXA150R then prints a high at 79+ on 7/12/19. The downside in stocks may have legs. If not, the SPXA150R will simply float higher for a few days again and place another top. Bears need higher volatility if they want to prove they can take stocks lower. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.