INDU Dow Industrials Erase 2012 Gains Daily Chart Oversold Positive Divergence

The Dow Industrials have gone negative on the year.  The starting year number was 12218, today it was ruptured.  Keystone rarely posts a Dow chart since it only represents the dirty thirty large caps; the S&P 500, SPX, is the best broad market index to follow. Note the initial top in late March. The skinny black rectangle shows the price above the 20-day MA above the 50 MA above the 100 above the 150 above the 200. It does not get any better than that, an uber bullish profile. Think of price and the moving averages as a ribbon. As price rolls over the ribbon will twist and roll over. Now price is under the 20 is under the 50 and the ribbon is rolling over.

The double tops were identified by the negative divergence which created the smack downs.  We watched all this as it developed and worked its way thru on the SPX this spring.  Just as the negative divergence, rising wedges and overbot conditions caused the spank downs in early April and early May, what has formed now? The green lines show positive divergence with an oversold RSI which are bullish wanting to see a bounce in price.  The price move down has momo, however, so it may take a day or so for the smoke to clear to allow price to bounce. Note the red line for the MACD line that is not in agreement with a price bounce.  Therefore, after price bounces, it should fall back down to satisfy the MACD, then positive divergence should be universal to at least allow a sideways to sideways up posture ahead, probably in concert with QE3. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.