Elan asked: I still don’t get it. What was NH-NL telling us about what the market is actually doing, in those dozen cases shown in your table? And how was it different from the many dozens of other cases when NH-NL turned negative over the years?

From 1928 to present there are 25,822 market days. I calculate 7,192 of those days where NH-NL is bearish - 27.85%. We typically consider the market bullish 70% of the time which is a close match.

How often does the NH-NL turn from bullish to bearish - that turns out to be 284 market days or 1.10% of all market days. Of those, how many took place within a close proximity to an All-Time-High? There are forty-seven cases in all - just 0.18% of the time.

There can be a bit of whipsaw at the top so I've chosen the first signal when there are multiple signals at a given peak. This table shows the forward results from these signals.

So for example, the maximum drop from the 7/23/2007 signal looking forward 36 months is -56.75%. The fixed forward return out 36 months was -27.67%.

Avg All Dates  10.75%   17.02%   28.37%   39.50%   -8.39%    -11.39%   -14.95%   -17.04%   3.50%      7.19%      15.37%     24.15%
S&P 500        Max Pop  Max Pop  Max Pop  Max Pop  Max Drop  Max Drop  Max Drop  Max Drop  Fixed Fwd  Fixed Fwd  Fixed Fwd  Fixed Fwd
1st Trigger    6        12       24       36       6         12        24        36        6          12         24         36
8/9/1929       12.47%   12.47%   12.47%   12.47%   -37.77%   -37.77%   -50.12%   -73.99%   -23.76%    -31.13%    -49.36%    -69.29%
1/18/1973      0.66%    0.66%    0.66%    0.66%    -15.49%   -23.39%   -48.71%   -48.71%   -9.01%     -18.76%    -40.51%    -16.82%
7/19/1990      0.36%    7.10%    15.29%   25.03%   -19.38%   -19.38%   -19.38%   -19.38%   -9.38%     4.81%      13.26%     22.09%
7/22/1998      9.81%    22.01%   33.40%   33.40%   -20.68%   -20.68%   -20.68%   -20.68%   6.00%      15.78%     25.79%     0.65%
4/3/2000       1.60%    1.60%    1.60%    1.60%    -11.06%   -28.21%   -37.27%   -48.96%   -4.76%     -23.54%    -26.23%    -42.34%
7/23/2007      2.24%    2.24%    2.24%    2.24%    -17.61%   -22.13%   -56.75%   -56.75%   -12.29%    -18.75%    -36.48%    -27.67%
10/18/2007     0.82%    0.82%    0.82%    0.82%    -18.38%   -45.47%   -56.70%   -56.70%   -10.40%    -37.99%    -29.78%    -23.36%
10/2/2018      0.56%    3.58%    22.74%   55.50%   -19.73%   -19.73%   -25.02%   -25.02%   -0.95%     0.53%      14.97%     47.10%
1/31/2020      5.21%    20.01%   49.39%   49.39%   -32.05%   -32.05%   -32.05%   -32.05%   2.51%      18.75%     37.40%     26.39%
2/25/2020      11.28%   26.28%   54.04%   54.04%   -29.93%   -29.93%   -29.93%   -29.93%   11.21%     21.83%     37.61%     28.26%
11/18/2021     2.42%    2.42%    2.42%    27.90%   -19.01%   -25.78%   -25.78%   -25.78%   -15.53%    -16.04%    -3.14%     26.88%
1/29/2025      6.42%    15.95%   26.19%   26.19%   -19.94%   -19.94%   -19.94%   -19.94%   4.81%      14.55%                

Expectations for a significant drop in the markets comes when there is a consensus of bearish signals firing at the same time as those signals given above.