Getting Technical

The technical term for what I mentioned in my last post is divergences. Divergences tend to lead to market tops. While the major averages are doing well, the average stock is not. Among the divergences are:
  • The Russell 2000 is well off its highs.
  • Momentum is waning. The last two highs have occurred with lower overbought readings.
  • Market leaders like semiconductors and financials are not making new highs while the major averages are.
The evidence is lining up to push me towards a net short position at the end of the week.

2 comments:

Anonymous said...

I own micro small caps. Under 50 mln MC and they are getting hammered for lack of a better word this week.

I should have just stopped trading for a while, but my greed causes me to give a little back to the mkt. Boo hoo.

Anonymous said...

Also see negative divergence with the market at news highs and the MACD and MACD histogram not confriming