Buy divergence setting up in the SPY and though a relief rally may be in the cards this week the lower high is still looming over this market
As most broad indices are experiencing a 20- & 50-MA crossover the common reaction to a technical bearish crossover is for price to revert back higher to gauge whether those averages are accepted or rejected. Failure to reclaim the 50-day MA in the SPY would be perceived as weak, whereas recovering this technical level could prove this to be merely a corrective phase before fresh highs are achieved.
It is important to keep the perspective of the weekly chart in mind as well. Price is very much within support and looks to be setting up a 2c-2d long setup.
The QQQ for example has registered a fresh momentum low
but in the context of the weekly that fresh momentum low looks like it may attract the fade-players. Interestingly enough, the QQQ could lose another 7% and have very solid support.
The DIA is still safely inside this sideways price channel
and in the context of the longer-term picture, a mere 8.9% off of all-time highs
IWM is holding support (on a buy divergence)
and 8.7% off of all-time highs though I'll admit, this chart looks most fragile than the others
The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at email@example.com
I am always open to questions, comments, or suggestions on how to improve this blog.