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Market Breadth is Poor at Market Tops - For years I have been searching for the Holy Grail of Clarity where it concerns helping to determine when an actual market top is forming. After reading this article recently I think perhaps I may have finally found some help in that area:

http://www.financialsense.com/contributors/chris-puplava/hindenburg-omen-imminent-warning-hot-air

Help that I would like to share in the form of some charts. I have always known that market breadth gets poorer as the market gets closer to a market top but I never knew just how much poorer? Would you believe that on average only 6% of the stocks on the DJIA have been hitting new highs at each of the last 14 major tops since 1929? According to the article linked above this is true. I see no reason to disbelieve it. After all everything you read on the Internet is true but then of course I am also a "French Model". LOL

So anyway while I cannot show you charts from every major top since 1929 I can show you how many New Highs and New Lows were seen at the tops in 2000 and 2007. Once you look those charts over it's probably a great idea to ask yourself how do our charts compare to that today or at the most recent highs for the DJIA and Nasdaq?

The 2000 Top Compared to Today:




Now




The 2007 Top




Now




The other interesting occurrence is that at the same time the market makes a Major Market Top the number of New Lows in the market is a lot higher than most people would suspect. This is when the Hindenburg Omen has its most useful sighting. All other sightings when there are still numerous New Highs will generally precede nothing more than normal pullbacks in the market rather than an impending Bear Market.

How many New Lows were there at the 2000 Top compared to Today?



Now




How about the 2007 Top?




Now