Note the divergence in the RSI. RSI is an oscillating index that measures internal market strength by comparing the total gains to the total losses in a given period. It is an index, meaning it can be expressed as a percentage. I used a 14 day period in this chart.
I trust the RSI more than most technical studies - not for the overbought/oversold condition jazz (though that can supplement my analytics). For me, the RSI is a warning service. In a healthy confirming market, price action and the RSI should be setting relative highs (or lows) together. In a upward trending market, if you begin to see new reaction highs in price but lower corresponding RSI levels, you get your warning. At a minimum, you should start taking profits and prepare for a minor trend reversal.
This single indicator has worked very well during this rally. If you look back to July and follow each reaction high, a divergence occurs in advance of every minor trend change. Today I notice the largest divergence in RSI since this rally began. I labeled it in purple. Just another one of those signals...
Anyway, today is a short post as more important things are happening in my family's life. I am wishing Trisha a speedy and healhy recovery from surgery!
Cheers and be well...
9 comments:
David:
Hope everyone is well. And thanks for the TA posts.
Best wishes to you, David. Trust all will be well...
Thank you for your post.
David my best for you and for Trisha.
Thanks as always
Good luck with Trisha. I am also getting near-term short signals that are flashing...
http://www.instigator928.blogspot.com/
Gracias David.
Good luck too you all
Another indicator yesterday was an extreme amount of call buying. This can be percieved as a top or bearish indicator.
best wishes david.. i went short this afternoon after i saw what seemed to be a down channel forming starting yesterday and through today - may be short-lived but will ride it until it breaks..
Thanks Attitude and Anon for your insights.
Devon, glad you caught some of the down move.
From a multi-day perspective, I think we are rolling right now. In that process I seechannels and wedges breaking on an intraday basis. They can be very profitable when identified early...
Good luck out there!
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