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Now that I've got you spooked (and me too), lets look at the tops over the past 20 years.
1987: No top, just a drop without warning.
1988: Top
1990: No top either. Two out of three reversals without a top to indicate or give warning. Not very good odds. But scroll down to the next chart.
1994: Top gave clear indication of the trend reversal.
1994 (november) Top indicates continuation of the bearish trend.
1997: A clear top reverses the two year bullish trend
1999 to 2000: A huge double top each with its own little top. If you didn't get out in March 2000, you would have had another chance at around September when the index fell below 16,500. By June 2001 it was apparent that the trend was a major bear.
We can also see that there were three teasers: tops that didn't reverse the trend. These were in 1992, early 1997 and 1999.
We can also see that in the case of the top of 1997, the index fell more than 25% before we got a clear indication of a trend reversal. Such a fall can wipe out all of one's profit and even put one into loss. PE on our monthly chart didn't even reach 20. So we had one rather tricky reversal situation whereby it might have been difficult to exit with profit. But it certainly wasn't too late to exit without major loss. That was a bear market that saw the index lose more than half of its value in eighteen months. The top was helpful, albeit not as helpful as it could be.
Conclusion: Barring the sky-falling case of October 1987, we could expect that we will get some indication of a top when the current trend reverses. In the case of a strong bull trend, such as the present one, we are likely to see extensive volatility marking the top. We can see great volatility now. But it's too early to jump ship now. There are no signs of a top at all. On the other hand, given the meteoric rise of the past eight weeks, it's time to keep an eye open for danger signals.
