The chart above is the Ratio Adjusted Summation Index ($NYSI). The $NYSI, which is a great tool to measure the strength of a Bull Market, is calculated by adding the daily values of the McClellan Oscillator. Readings above 500 convey the message that we are in a Bull Market and will continue to make higher highs.
However, over the last year a bearish divergence has formed. As the Market continues to go higher, the $NYSI continues to trend lower (shown on the chart above). Thus, this indicator is signaling a potential significant top looming for the Stock Market.
Unfortunately, what this indicator does not tell us is the timing of such a top. A significant pullback could range from days to months from now. That type of information is better left to other indicators such as RSI, the VIX or perhaps Bollinger Bands.
Regardless of timing, this indicator is telling us the risk of investing/trading in this market has greatly increased via negative divergence. Trade and invest with caution!