A further divergence on the lines. If you consider only the major highs of the lines, this would be the second divergence. However, if you consider all the peaks, including the smaller ones, this would be the third. After all, it doesn't really matter if it's the first or the fifth, it is there, and it is .
Although the rally was very impressive, the has not made a new high. Note that the FI is already oversold and this is not good in terms of finding a trade.
Then we come to the bars. In mid October, a massive with impressive was drawn just below the Wave. That is where I bought the Nasdaq. The next week, the impulse turned green.
Right now, we can see again an impressive bar, this time at an all time high, which shows the ease of downward movement.
Besides this, we have a , which in combination with the bar is really .
Another look at , but from a different perspective, in this case waves. During the September - October decline a change in behavior occurred. The during this decline is the biggest we can spot for years! Now look at the wave during this impressive rally! It is much smaller, after the SP500 climbed well above 2000. This is typical behavior for a top.
Finally, we have the support at 2000 broken, which was the major level everybody was watching. This break is very because of the way it happened and the forces involved (beside the arguments about the volume-candle picture, the impulse turned red immediately).
To make a summary, this chart looks very , but the problem is it looked before too, and all we got was a decline to the Wave. Because the Wave is so close and the is oversold, it is hard to say that we will see a 10% decline in the next couple of weeks, especially with the holiday season around the corner. However, I plan to have a short position right now and ride it till I think the correction is over.
Note that on many major stocks, there are divergences on the weekly and , so the market is in sync for a decline.
Trades here : DOW SP500 Nasdaq