Slight Negative Divergence

Slight Negative Divergence

June 07, 2024

Key Takeaway

The S&P 500 is no doubt on a tear this year.  In fact, the only noticeable pull-back (nearly 6%) resulted after a major Negative Divergence had occurred.  This is where RSI (or momentum) begins to fade or lose strength, while the market continues to climb.  Since the prior divergence, the market has recovered well to make all new highs.  So here we are again...  We have a slight (not near as big as last time) Negative Divergence.  No need for concern at this point however.  It's not uncommon for Negative Divergences to result in healthy pull-backs or good buying opportunities, which until proven otherwise, are how they should be treated. RSI is still above 50, MACD is positive, trends look great...really nothing at this juncture points to trouble - but, eventually it will, and we'll be ready.
 

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