3C is my proprietary indicator that uses positive and negative divergences to identify institutional accumulation or distribution. The idea is the indicator should make new highs with price making new highs to confirm and uptrend, when it fails to make new highs with price, you have distribution and vice-versa.
The DIA above( I use ETfs of the averages as they give better and faster signals)
-A Price makes a new bear market low, but 3C makes a higher low typically signaling a reversal as the issue is under accumulation. In this case the indicator called the market bottom.
-B June DIa made new highs, 3C failed to make new highs and we saw a pullback lasting about a month and shedding about 7%.
-C the pullback made lower lows, 3C made higher lows indicating a reversal and the end of the pullback
-D Until November, 3C made higher highs with price. December saw a slightly higher high, but more or less a retest, 3C should have been at the same level as it was at the highs of November, instead it signaled distribution by making a roughly 30% lower high. As of the recent breakout, it lost 60% since November indicating severe distribution .
The IWM and a slightly faster version of 3C
-A At the March lows 3C makes a higher low=accumulation and a market bottom
-B Similar to DIA, another negative divergence right before the pullback
-C Again, like DIA 3C is confirming the higher highs
-D and again at point D we see another negative divergence=distribution
-E makes a lower low than the July lows-another sign of distribution
-F the pullback at F is higher than the pullback at E, yet the indicator makes another lower low
-G from point c to the breakout highs of G, 3C lost 40% indicating severe distribution
SKF
This is a huge triangle base and you can see that 3C is climbing higher indicating heavy accumulation. The triangle base alone is an indication of accumulation, 3C just makes the case.
UUP-proxy for the US Dollar
First we have a bullish descending wedge, then as UUP makes new lows the fastest 3c makes consecutive higher lows and the dollar reverses and is now in a powerful leading divergence. Note the market moves inversely to the dollar typically; another indication we are near or at a top in the market.
USO-oil
By now you can probably understand how the indicator works and can see even smaller divergences that I have not pointed out. After a nearly 6 year rally in oil, 3C calls a top between the highs of May and the top at July.
