6 posts tagged negative divergence

Last week I suggested that market breadth doesn’t matter, until it does. By which I meant that inspecting every twitch of the cumulative breadth measure for the market isn’t all that useful. Most of the time, this indicator is brought up because there is a “negative divergence” which then is used

So, the global cues didn’t seem to matter today. Dow Jones was marginally down, Asia was mixed. Our markets bounced back from the technical support levels and kept going up through the day. Even in the last 30 minutes it just lost about 10 odd points. No big profit booking or selling on rallies seen.

It has not been wise betting against steel stocks, but there may be a low risk short setup forming. Let's take a look at the chart of AKS, which is representative of many steel stocks (MTL, ZEUS, X). The first thing that concerns me is that RSI has made a lower high while price reached new highs.

Bullish Percents getting a little toasty Declan Fallon Writes: Although not of immediate concern, some of the bullish percents are about to enter bear market (but not bull market) top territory. If January lows represent the start of a bear market then these breadth indicators should top soon.

This post from August 2007 offers some timely advice on shorting momentum stocks: Those of you familiar with my trading style know I rarely short high flying stocks. While it seems logical to go against a stock that is overextended, this type of trade generally takes on too much risk.

Ronald wants to know if I consider the 3.7% drop in CNX, a stock I highlighted earlier in the week, a buyable pullback. While I would not buy just yet, the stock is still technically sound. Support has not broke and volume on today's decline was within the stocks normal range. OBV still looks good.