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Bullish Divergence Emerging

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June 04, 2012 – Comments (0) | RELATED TICKERS: SPY

If you've followed SharePlanner for a while now, you'll know that I like to call upon the T2108 indicator that determines the percentage (%) of stocks trading above their 40-day moving average. In that indicator, it helps to find divergences, and movement extremes in the broader markets. 

After checking it out over the weekend, the one thing that I noticed is that the T2108 is indeed giving us an extreme reading and is at the levels that we saw from last October (though its off of the lows from last August) before we ended up going on a six month rally. 

The bullish divergence comes from the lack of a new low despite the broader markets doing so and pushing below the 200-day moving average as well. That is why at this level here that we are at, I am very uncomfortable with adding new shorts to my portfolio. 

At this point, I think we are due for a descent bounce, and whether that comes today, this week, or not, is a big unknown. What you need to be aware of is that the chances of it is heightened, and to adjust your strategy accordingly. 

Here's the T2108 Chart

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