We have negative divergence in a couple of key breadth indicators, the Advance/Decline line and the Cumulative Volume Index. Neither really looks like a problem except that this is the first time in a long time that these two have not moved in sync with the market. The real problem is that negative divergences in breadth indicators often appear at market turning points. In this case, that would be to the south. Because of what’s been going on over the past few weeks, this bothers me quite a bit, but then it’s probably just my ole’ paranoia taking over again.
And then there’s the Q’s. As I went on about a week or more ago, the Q’s and Big Tech have been leading this market around by the nose. After yesterday’s big gap up, the Q’s flat lined, and then they dropped today. This is not good and unless or until the Q’s begin to move up with gusto, then the whole market is at risk.
In using the 13/34 EMA method to trigger buy and sell signals, it’s important for these MA’s to cross through one another. Q’s were not able to coax the 13EMA up through the 34EMA today and so by this method Q’s remain an ‘Avoid’ per my strategy. If you are long the Q’s you are really going to want to see the 13 cross up through the 34 and pronto.
Chart courtesy of FreeStockCharts.com
$DAX closed above the 50MA today. That’s good. Let’s see what this important index does over the course of the rest of the week.
I have to tell you that I’m getting a little nervous here. More so than usual.