DeMark Marks the Top?

Since the SPX generated a TD-Sequential sell signal on the January 14th, the high thus far was set the very next trading day. Everything is in place for a reversal: sentiment extremes, diverging breadth, and overbought momentum. By some measures the market is the most overbought in decades. For example, the market has not closed below the 10 day moving average in 34 trading days (closing slightly below it today), something that has not happened in over 80 years according to sentimentrader.com.

Chart 1: SPX with Indicators

I'm just waiting for a close below .8 standard deviation from the 10 day moving average, a sign that price action has changed direction. The Russel 2000 and the Nasdaq have already closed below this line, while the Dow and S&P are still holding out. While candle patterns tend to be wrong often, they are also typically the first sign of a turn price action. They become even more predictive when all the other indicators are lined up, as they are now. Fisher transformed momentum is overbought, while stochastics look like they are starting to turn down. Coupled with all the other indicators I've been outlining on the blog (the put call ratio, McClellan, VIX, sentiment surveys, etc) and the result is a bearish mosaic.