Although the Bulls are still in control and we are on offense, the chart of the S&P 500 Index shows some potential weakness and indicates that a possible correction could be just around the corner.
The first area is in the Moving Average Convergence Divergence (MACD). We see the price of the S&P 500 Index has reached a new high, but the MACD lines are lower than they were just 2 to 3 weeks ago. That means that the MACD, which is a momentum indicator, did not validate the new highs.
The second area where we see a negative divergence is in the Relative Strength Index (RSI). Both of these indicators could be signaling something. This is on a daily chart, which is not as strong as a negative divergence on a weekly chart, but if the negative divergence plays out we could be entering a correction in the markets again. Perhaps that is why so many bond charts showed up on our filters and scans this weekend.
The first area is in the Moving Average Convergence Divergence (MACD). We see the price of the S&P 500 Index has reached a new high, but the MACD lines are lower than they were just 2 to 3 weeks ago. That means that the MACD, which is a momentum indicator, did not validate the new highs.
The second area where we see a negative divergence is in the Relative Strength Index (RSI). Both of these indicators could be signaling something. This is on a daily chart, which is not as strong as a negative divergence on a weekly chart, but if the negative divergence plays out we could be entering a correction in the markets again. Perhaps that is why so many bond charts showed up on our filters and scans this weekend.
