thsumlauft
Short

DJIA vs. DJTA Divergence Supporting Diverging DJIA Price and RSI

INDEX:DJY0   DJIA
As pointed out in a separate comment, the current price/indicator setup increasingly resembles that of 2000 and 2007, immediately before indices' pronounced price declines. See the following chart for the parallels between 2000, 2007 and now, as previously posted:

Is the SPX Forming a Market Top? A Look Back at 2000 and 2007

A look at the Dow Jones Industrial Average             and the Dow Jones Transportation Average confirms that pessimistic view. Beginning in mid-2007, the DJTA started to trend downwards, while the DJIA             remained caught in a relatively narrow trading range over the course of 2007 until early 2008. This pattern is currently being repeated, as the DJTA finds itself in a downward trend which started in late 2014, while the DJIA             has been flat over the same time period.

Even more signficant, in my view, is the divergence between DJIA's price movement and the RSI , which is apparent since early 2013. It is worthwhile to point out that the longer such a divergence lasts, the stronger is its explanatory power - and eventually the correction it calls for. With the current divergence between price and RSI having started more than two years ago, this is substantially longer than the roughly half year discrepancy we experienced in 2007, before prices corrected about 50%.
Ideas Scripts Chart
United States
United Kingdom
India
España
Italia
Brasil
Россия
Türkiye
日本
한국
Home Stock Screener Economic Calendar How It Works Chart Features House Rules Moderators For the WEB Widgets Stock Charting Library Priority Support Feature Request Blog & News FAQ Help & Wiki Twitter
Private Messages Chat Ideas Published Followers Following Priority Support Public Profile Profile Settings Billing Sign Out