Last week, I spoke about Divergences and their importance.
Some technicians use a 30 day Momentum indicator in order to spot divergences.
Although it is not one of my favorites, it does offer a divergence warning
for investors.
For example, look at today's NYA Index plotted against a 30 Day Momentum indicator.
In May and June, it was clear that the NYA had a Negative Divergence with
its 30 day momentum. The divergence continued on until the momentum indicator
fell below its support line ... and that was the indication that the NYA Index
would have a pull back.
So, now we are seeing another such divergence building for August and September.
The divergence is increasing, but the Momentum Indicator is still holding above
its support. Keep an eye on this indicator, for when it breaks support, the
NYA will pull back.
Marty Chenard is an Advanced Stock Market Technical Analyst that has developed
his own proprietary analytical tools and stock market models. As a result,
he was out of the market two weeks before the 1987 Crash in the most recent
Bear Market he faxed his Members in March 2000 telling them all to SELL. He
is an advanced technical analyst and not an investment advisor, nor a securities
broker.
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