Here is why the market will tank.. huge divergence

Discussion in 'Trading' started by Trend Fader, Nov 9, 2005.

  1. My goodness! What part of new highs don't you understand?
  2. huh?
  3. All that came up was the DOW.

    Anyway, I posted something similar just a few minutes ago

    But "tank" seems kind of strong to me :)
  4. I don't think that it is a question of "New Highs" as it is the fact that the NASDAQ Composite is calculated under a market capitalization weighted methodology index.

    Hence the divergence.
    Quite simple.
  5. Okay, I follow the diamonds and if I HAD TO I would be putting my money on a test at 107. Why, because I think there are a lot of shorts that are going to get stopped out between 106 and 107 and then the potential sellers will start selling at 107.

    Today's range was a minor R test and break if my middle horiz line means anything (which it doesn't - see chart). BUT given, the recent swings, I would not at all be surprised if 107 was the major turning point towards a new direction up or down.

    In other words, I do not see any decisive direction as of now, BUT all that consolidation from 106 to 107 seems like a comfort zone.

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  6. Babak


    The board's software cut off the link, its:$naad

    And yes, I can explain it because I also tripped upon it a while back and thought I had discovered something significant. Turns out its a red herring.

    The mistake that I made (just like you and perhaps many others) is to extrapolate from the data shown on the charts in the link. In fact the Adv/Dec line has been going down for a long, long time now and it doesn't present any real insight into the markets.

    The AD data is useful but not in that format [hint].
  7. Mike,

    I see short term negative divergences all across the board now. If the NDX can make it through 1640 (there's a years worth of resistance there), the DIA can easily get to 107. But, a 2-3 day pullback here, to reset the momentum oscillators, is exactly what this market needs to launch an assault though all that overhead resistance. Let's see if we get it.
  8. LOL, I noticed that a while back too.
    But when you look at all the other indices, you can see their A/D's have been streaking higher, even through the corrections. Typical strength needed to continue the bull market.
    I think our NAZ A/D might make a double top before it's all said and done with.
  9. mhashe


    If the VIX breaks its most recent low, look out shorts. We're going to the moon so to speak. There is a lot of macro stuff going on that is buffeting economies worldwide. It could be Chinese insatiable demand for raw materials and their dirt cheap manufatured goods, Russia opening up its economy and providing dirt cheap raw materials, India opening up and providing dirt cheap IT work. There is something going on, so better to junk every indicator and just follow price. Better get your trading groove on, cause I have a feeling next year will be wild.
    #10     Nov 10, 2005