Bearish signal on the SharePlanner Reversal Indicator

How much credibility should I put in this indicator?

 

Over the years, the SharePlanner Reversal Indicator has served me very well, and it still does. But it requires a correct interpretation. First off, no indicator is 100% correct, but they can provide clues on the future of market direction. Sure a bearish reversal can result in a move higher still, and there is a chance that happens here. I mean lets be honest, over the last year how long has any sell-off lasted? 

So I see this reversal signal here, but I am not going to automatically get bearish on this market and start shorting the crap out of it, simply because the indicator says so, because the most likely outcome is that we get an extended period of sideways and low volatility in the market.

Sounds familiar? Yes – that’s because that has been the market for much of this year. That is why, I won’t be surprised to see the market avoid a big sell-off, even though it is long over due for one, and simply trade in a sideways fashion as it has done on most of the bearish reversals over the last couple of years. 

Here’s the SharePlanner Reversal Indicator: