While I’m by no means an expert on market breadth, I do follow a few breadth indicators and research as I believe them to be a true reflection of what market is actually doing, as opposed to various sentiment reviews, which are subjective at best. One of the signals that has triggered relatively recently was the – rather obscure-  ‘Titanic syndrome’, which was first coined by Bill Omaha in 1968 and detailed in ‘Patterns that detect stock market reversals’ paper. Interested readers are free to peruse the paper itself (I do think it’s worth it), but in summary, it aims to detect a major market top, predicting a market drop of at least 10%. Assuming I calculated the signal parameters correctly, the ‘Titanic Syndrome’ signal triggered on 4/4/2012. While it’s not unusual for the market to make a yet another attempt at recent highs (sometimes even surpassing them), it should be viewed as a bull trap and an opportunity to close long positions and – if you are an aggressive trader – open new short positions.

It’s of little value to reiterate what’s already stated in the ‘Patterns that detect stock market reversal’ paper, so I’ll leave you with the chart that I originally posted inside 12631 over a month ago on 4/5/2012:

In addition to the Titanic Syndrome signals there were certainly other clues, which I’ll leave for another post after my friend Don Julio is gone after his annual May 5th visit.

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