Monday, May 14th. - Stock Trends, Charts, and Commentary (***If you see last week's Monday Update do a refresh: Click Here)
Strength and Positive Divergences ...
Let's start by discussing the NYSE's Strength today. As you can see in the chart below, the Strength is Negative with the 9 day C-RSI below the 30 day C-RSI signifying market weakness. When you look at the NYSE's Declining Volume, it is also in negative territory with a short term cross-over up tick on Friday. Together, they are in a negative market condition.
However, when you look at both charts since early May, you can see that both the Declining Volume and the C-RSI (Strength) have an up slope while the NYSE Index has a sideways moving support line. This is an example of two positive divergences that are building up contrary to the action of the NYSE Index.
You can see a prior positive divergence at the left of the chart which occurred last August and September. The problem with positive divergences is that they can take a fairly long time before they actually kick in.
What it takes for them to kick in ...
Last October, the positive divergences kicked in on the day that Institutional Investors went back into Accumulation with the Institutional Selling Activity shifting to a down trend ... that was the trigger then, and it will more than likely be the same trigger in the coming days.
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