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SMT divergences work because big money distribution and accumulation affect correlated assets.

From The Truth About SMT Divergence in Your Trading Model · jumps to 4:22 · speech

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When we're at that location, then you can look for divergences as number two. Why does SMT divergences work? This is answered in things that you already know. There's nothing new here. So what real big money is selling, right? We see massive selling. Look at 1010, right, in October. Everything is crashing. Some assets go down more than others, but the entire asset class, all of these correlated assets are selling off aggressively at the same time. That's real distribution. Institutions, big money are getting out of positions. Same thing when there's real money, big money buying.
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