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I think basis for DBE is this from Jim (bold by me):

bull market, could go on for years. Then a stretch of 3~5 months without a fresh high, but little net downwards move. Average -8%. Once there has been no fresh high for 5 months, that's a pretty good time to call it the end of the bull rally

The super-long bull market that ended Nov'21 ended with exactly the opposite: Sudden and very sharp down, 20% during the next 5 months (nearly 30% down after 8 months).

The short bull that followed Sep'22-mid'23 (+30%) also ended with again sudden and sharp down.

Yes, DBE is a long lag indicator.

DBE will not protect you from a more sudden, sharp bear drop like the max 19% drop starting in November '21. The good news is that it is not as susceptible to whipsaws as some of the other indicators. That said, *in a volatile market it is slow to react*. It's not intended to be used in isolation.

For that matter look at the Coronavirus crash in '20. DBE did not go bearish until after the fastest crash in history followed by the fastest recovery to almost where it was in December of '19, then flipped back to bullish in 5 days as the recovery continued and set a new high. One needed to use other indicators to get a picture of what was really happening.

It's a great indicator for a less volatile, calmly & slowly declining market situation - like the beginning of the GFC bear in '08.

Hope that helps.

FC

The S&P 500 surpassed it's July 27th intraday high today (by 0.05%...). So (technically) the DBE indicator will have a "bullish" reading for a minimum of another 99 days.

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