Saturday, March 22, 2014

MACD Multiple Time Frame Bearish Divergence on SPY

MACD Multiple Time Frame Divergence on SPY

This stock market video covers the SPY ETF and explains the current multiple time frame divergence in the MACD indicator.  There are both weekly and daily time frame bearish divergence patterns in SPY which indicate the potential for a significant high occurring at this level.

Additionally there is a minor failed breakout of the March 7th high, and a potential major failed breakout of the January 2014 high if prices continue lower below the 185 level.

Friday displayed a reversal day in SPY with the S&P 500 moving to slight higher highs, but reversing sharply and closing near the lows in a wide range day.

On the balance the technical analysis suggests that stocks are likely in a position to decline from this level, and traders should be in cash or sizing up shorting opportunities.

I wish you all the best in your trading.  If there is anything else I can do to help you develop as a trader, drop me a comment to let me know what it is or check out my trading courses.



  1. Thanks Pete. Can we say looking in March developments that a kind of a triangle is forming? What do you think?

  2. I think I see what you are looking at. Personally this does not appear to look like a triangle to me. And either way, the significance I see are the non-confirmations of QQQ, IWM, and DIA with SPY as SPY made a slight new high. And a reversal candlestick with divergence that moves above an old swing high and then immediately reverses to close below the old high is a pretty high quality reversal bar in my experience.

    So I would look at stocks like RYL, DHI, PHM, LL in the housing sector as major double non-confirmations with nice price patterns for shorting. BPOP and SCG also look like good set-ups.

    If you are looking to short an index ETF, then you can use the simple strategy I laid out in the video, and use a moving average channel on hourly or daily time frame to trail a stop on the short position until either stopped out or until a put/call ratio buy signal occurs.

    If you need any help with managing a trade once in it, definitely get back to me. Entry is easy, but the trade management until exit is tougher psychologically and in terms of consistent yet potentially flexible execution.

    1. Thanks Pete. Will try some trades and will let you know.