Monday, November 11, 2013

SPXA150 Stocks Above 150-Day MA Daily Chart Negatively Diverging for 6 Months

Keystone highlights the positive and negative divergences often in the charts but there are many other styles of divergences to monitor. The SPXA150 prints the number of S&P 500 stocks above their 150-day moving averages. A stock or index is in full bull mode if price is above the 150-day MA and if the 150-day MA is positively sloped. The circles in the chart above identify all the significant market tops over the last year. The SPX continues higher across this entire time frame but note how the SPXA150 chart peaks in May and the red circles show a downward trend for the last one-half year, hence, the chart negatively diverges as compared to the SPX. In market bull mode, you want to see higher highs in SPX with higher highs in SPXA150 to show that more joyous upside fun is ahead. The chart above says the booze ran out in May.

Earlier this year into May (green circles), the SPX and the SPXA150 both move higher in sync pointing to more upside happiness ahead. The wine was flowing like water. But after the May pivot, for each market top, note the drop in stocks above the 150-day MA from 465-ish, to 440-ish, to 420-ish to 407, each higher high in the SPX met with less participation. Watch your wallet moving forward. 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.

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