Wednesday, February 6, 2013

Bearish Divergence in Stocks

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This is an hourly chart of SPY.  There is a strong bearish divergence on the MACD present at yesterday's slight new rally high.  The chart has the look of a very short term double top.  The indexes are set to gap down this morning, and a cross of the MACD may initially target Monday's low, but a break of that low would give a target to around 147.50 for a textbook double top projection

Click on Chart to Enlarge

The daily chart is showing a building bearish divergence in the RSI with prices near the upper Bollinger band.  A multi day pullback may offer another nice short-term long trade set-up.

Foreign stock indexes cracked harder on Monday than the US.  And the rebounds were weaker yesterday. They look like they could still fall a good bit even in the short term.

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