xjo - weekend charting and chat, page-24

Yes, the ECRi WLI is not without flaws. I called it a construct and it is the consistency of it that matters given it would have played in your favour through the dip that was 1987 during the bull run into 2000. Thanks for the link. I stopped following the WLI but it is still part of a basket of indicators used by punters.

"Be warned, tasseography may be more reliable in its predictive prowess than what the WLI " harsh but fair. Same could be said for many a wonder muppet.

The reality of stocks and component indexes reliant on adjusted 'ratios' to justify the prevailing price is no more meaningful. "Ratio adjustment" is frequently used to explain current prices while earnings remain flat or in decline. Hardly a fundamentally sound justification for rising stock prices.

The point is, 'if' the WLI is in fact indicating the underlying conditions more accurately than simple PE ratios, then caution is warranted as downside cover might prove profitable. It would be simple if there was only 1 golden indicator for everyone to use to initiate buying or selling.

As for the rest, the fact that US treasury interest remains strong in 10yr and 30yr with prices supported from recent lows is generally not a positive. Shiller CAPE indicates that if earnings don't improve consistently faster there is increased likelihood of price weakness. This rotation would be counter to the popular threads of the moment,

Good enough reasons to explain the lack of advance into new highs IMO.