Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Battling Between Negative and Positive Divergences

Stock-Markets / Stock Index Trading Feb 26, 2009 - 09:47 AM GMT

By: Marty_Chenard


Best Financial Markets Analysis ArticleCan a market positive and a market negative coexists at the same time?

The answer is: For a short period of time.

What you are describing when you discuss such conditions are "conflicting market conditions". Conditions where there is a "force in one direction" being opposed by a "force from another direction".

When the power of each of these forces is equal, there is a "standoff" where neither force has the advantage. Until one of the forces establishes the dominant position, the situation is a neutral standoff.

Let's look at such an example today. Such a "conflicting market condition" shows up when we look at our chart of New Daily Lows on the New York Stock Exchange along with our zero-based Relative Strength for the S&P 500.

This is a fascinating chart because it shows that the S&P 500 is now at a major testing point. The S&P has recently dropped down to a level that necessitates retesting the November low. The S&P has not broken below the support, or rallied yet because ...

Because ... Just as this is happening, there are "conflicting market conditions" where opposing forces are offsetting each other. Each is holding the other back from a rally or from a descent down further.

Notice what is happening on this chart.

First, the New Lows peaked in October. The New Lows were then followed by a lesser rise in November while the market made a new low on the S&P. That was a positive divergence, where the market rose from there ... only to fall back down to retest the S&P low again. But notice how, once again, the New Lows have a Positive divergence ... and this time, the divergence is more positive than the last time. So, we have a "positive force" acting on the market.

Second, look at our Relative Strength for the S&P 500. Note that the Strength for the S&P 500 is negative. Also, note that the short term trend has been moving lower. So, here we have a "negative force" in play. (Some of you may also observe that the Relative Strength also has a positive divergence when you look at the October to February time period. However, the dominant force on the Strength is a down force because it has recently made a lower/low .)

Summing up the two, you have one positive and one negative force ... a standoff as a battle of the forces fight for dominance. It isn't until such divergent forces "clear themselves off the table", that the stock market is able to establish a direction for the next trend. (The update of this chart can be seen every day on our paid subscriber site.)


*** Feel free to share this page with others by using the "Send this Page to a Friend" link below.

Send This Page To a Friend

By Marty Chenard

Please Note: We do not issue Buy or Sell timing recommendations on these Free daily update pages . I hope you understand, that in fairness, our Buy/Sell recommendations and advanced market Models are only available to our paid subscribers on a password required basis. Membership information

Marty Chenard is the Author and Teacher of two Seminar Courses on "Advanced Technical Analysis Investing", Mr. Chenard has been investing for over 30 years. In 2001 when the NASDAQ dropped 24.5%, his personal investment performance for the year was a gain of 57.428%. He is an Advanced Stock Market Technical Analyst that has developed his own proprietary analytical tools.  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.

Marty Chenard Archive

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in