You might have noticed, SPX has been giving divergence signal for some time now. It could mean momentum loss and that sellers are starting to come in. Let's see how this turns out, my hunch is that we will get a strong pullback.
Divergence explained: divergence means low trade activities, do not necessarily mean reversal though it is an indicator for one.
In this context divergence is not a bearish signal because it is common knowledge nobody is selling. How do i know? Well common sense, TINA with low interest rates.
If anything, a low RSI or Volume means more strength to break above in this scenario as buyers are sitting on records pile of cash waiting to enter market (which if it happens drives prices up not down)
Short sellers, where are they? In this new age of market you cannot overleverage on selling, so these become irrelevant.
Conclusion: just relax and enter more long positions if you can afford
Jezza323
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@poister198, Hey thanks for the comment. You might be right. However, the evidence suggests that previous two divergences lead to two 5% or so pullback. So I am not convinced with your conclusion. I agree that long term trend is bullish. Short term, it looks like we are pulling back. Time will tell.
In this context divergence is not a bearish signal because it is common knowledge nobody is selling. How do i know? Well common sense, TINA with low interest rates.
If anything, a low RSI or Volume means more strength to break above in this scenario as buyers are sitting on records pile of cash waiting to enter market (which if it happens drives prices up not down)
Short sellers, where are they? In this new age of market you cannot overleverage on selling, so these become irrelevant.
Conclusion: just relax and enter more long positions if you can afford