![image.png](https://i.imgur.com/MUZbilh.png)

I have failed so many times to determine when a top has occurred and have been burned countless time on trying to find it. After a stroke of luck in finding @indexindicators.com I have spent the last day analyzing market breath at different moving averages and noticed something really special. So special that I believe will be useful for me to time the next top.

Focusing on the S&P as it is one of the highest liquid assets traded in the market, cover post chart is a 10 day moving average. When there is a clear divergence, red line sloping down, between market breath and stock price it is clear that a shift down in price accelerates very soon after. The longer the divergence the more pronounced the down move.

If we look a market breath stocks above their 50 day moving average we get this.

![image.png](https://i.imgur.com/bHSRPmy.png)

Then market breath on the 100 day moving average.

![image.png](https://i.imgur.com/6cRLSbA.png)

The main takeaway is that market breath breaking down takes time to occur. This makes sense as stock prices needs to breaks 10 day moving average before 50 days and that before 100 days and so forth. So something I also noticed though, is that breath no matter what moving average always leads stock prices. 

The 10 day moving average is currently breaking down and last week S&P went down slightly. However based on the 10 day chart I would not go short or assume S&P has reached a top since it is almost at -1 SD. I will wait to see when the 10 day turns up and determine how far further it can get to see if a short in S&P is viable. Again based on 10 day breath is already near a low and hence further weakness is less likely.

The 50 day is showing a slight uptick in breath and if market breath is a leading indicator it is positive news for S&P. The 100 day is still moving down which confirms S&P is currently in a down trend. However if 10 day moves up while 50 days then would move up even more this will turn the 100 day to be in a positive direction. Bottom line is probability is market breath appears to be strengthening although not sure if it will get to a higher high the trend is diverging from price. The next high in market breath on the 10 day will likely be a good point to short because on the longer time frames such as 100 day and 200 day they are down!!!

To get a really good preservative just look at Nasdaq on the 10 day market breath:

![image.png](https://i.imgur.com/uRaNrFX.png)

Probability for a market drop is very likely but since market breath is already near a low the likelihood of further downside is not as pronounced now as when back in Sept. or Feb. in the Nasdaq. This by no means says we can not crash but probability is leaning in favor for the bulls. However its only temporary as the real trend is down due to market breath at longer moving averages are trending down.

I mention all this is because trend can be down but due to short investments that decay such as put options or inverse ETFs it is very important for traders to find the tops or else be difficult to profit from a drop in market prices. The probability will turn in your favor if you pay attention to market breath diverging and by how much.

Thanks for reading!

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