So I created 2 indicators. With it, I'm able to visualize deep and technically scarring a sell-offs. One has 5 layers, of which the top most layer is the easiest to turn red. A sudden crash in prices will penetrate all 5 layers at the onset. A slight pullback or "dip" will only color the top 2/3 layers. Although the selling in the past few weeks have been brutal, they have so far only gone as deep as the first two layers. I have yet to see signs of an immediate market crisis. The other indicator is basically an output of the same information; just visualized differently. The benefit of this second indicator is that market crashes can be seen a mile away. Let me demonstrate.
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This is what the indicators show before a market melt
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the same type of pattern appeared on the SPY chart before it melted in FEB
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What the indicators saw during recent selling on SPY
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here is one from this morning. That being said, the SPY chart isn't giving off bad vibes yet. I will update as news develops.
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Another very useful advantage is the ability to buy dips. When all the red is out; you can basically buy the dip without catching knives.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.