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In cases where the market is topping out, the Titanic Syndrome and 3-D divergences are quite reliable. Usually, as the stock market peaks, you can expect to see 3-D divergences before any other signal. At times, though, the DJIA will make a new high before the 3-D top is obvious and this high should alert you to look for the Titanic syndrome's telltale excess of NYSE lows. The tougher call is at market bottoms where the Titanic Syndrome never appears and the 3-D base may not occur. In the absence of these patterns, a 10% drop in the market always is the warning to look for reversal patterns.

I confirm any of these initial signals—the Titanic Syndrome, 3-D divergences or a 10% market drop with the patterns in Figure 3 which are based on the number of NYSE advances and declines, NYSE new highs and new lows, closing prices and the outside day chart pattern (Figure 4). The confirmation signals appear in various combinations in different markets. You may see one or more of them at a top or a bottom.

Different confirmation patterns also take longer to develop than others. Like other traders who are quite comfortable with the "feel" of their systems, I usually take a position when I detect the first confirmation pattern. This means that I rely heavily on 3-D tops and bases, the Titanic Syndrome when the market is at an all-time high, and advance/decline patterns.

For those who require absolute assurance that an uptrending stock market is reversing direction (or as close to absolute as technical analysis can provide), the minimum combination of confirmation signals is: • two consecutive days where the number of declining stocks is over 1.000 and one of those days shows a 1:4 advance/decline ratio, and/or 4 out of 7 days in which the number of declining stocks on the NYSE is over 1000;

The first half of the Titanic Syndrome appeared on August 25, the day the Dow Industrial reached its all-time high.

• five consecutively lower closes on an average (I use the DJIA);
• a total of five days in which the number of yearly NYSE new lows on each day is greater than new highs.

In a declining market that is about to bottom, the 3-D base may or may not appear. That is why any time an average's or index's lowest intraday low has dropped 10% from its highest intraday high over any time period, I begin looking for signals that the trend is bottoming out. For complete assurance that a reversal is under way, I require at least:
• two consecutive days where the number of advancing stocks is over 1,000 and one of those days shows a 4:1 advance/decline ratio, and/or 4 out of 7 days in which the number of advancing stocks on the NYSE is over 1,000; • five consecutively higher closes on an average (I use the DJIA);
• a total of five days in which the number of yearly NYSE new highs on each day is greater than new lows.

Also, prior to these patterns for a bottom, I usually see an oversold pattern—the NYSE advance/decline ratio at 1:9 or greater.