Tops are processes: Here's why

I received a ton of comments after yesterday's post (see A correction, or the start of a bear market?), probably because of the tumultuous nature of last week's market action. Readers pointed out a number of buy and sell signals that I had missed in yesterday's post and asked me to comment on them. (Rather than email me directly, I encourage everyone to put their comments in the comments section rather so that the rest of the community can see them.)

The bullish and bearish signals are not necessarily contradictory, as they operate in different time frames. I believe that they reinforce my conviction that the market is undergoing a long-term top. Tops are processes. Stock prices don`t go straight down when the market tops out. The most recent break was just a warning.

Even if you are bearish, I reiterate my view that the markets are too oversold to meltdown from current levels. Rob Hanna of Quantifiable Edges found that market bounces that begin on a Friday tend to be the most reliably bullish.

Here is the other feedback that I received which makes me believe that the US equity market is in the process of making a top.

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