Quote Originally Posted by MTman View Post
Mike,
Mathematically this makes sense but it seems so far that leading stocks are behaving strong. Wouldn't a breakdown of leading stocks need to occur first to bring validity to this prediction model? Also, is this model predicting an intermediate correction is coming or bear market?
Not really. There was little breakdown in leading stock on 31 October 2007 market top. What Didier Sornette says about this analysis is that it attempts to catch the herding nature of man, when everyone is leaning in the same direction. Everone leaning in the same direction is unstable. It is the market version of climax activity. A stock in a climax run shows no weakness but that doesn't mean that it isn't very dangerous. This kind of analysis is new to me. And as any new technique it needs to prove itself before I feel comfortable with it.