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Wednesday, April 15, 2009

04/15/2009 Market Recap: Beware of Negative Divergences

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Overbought Beware of $NYA50R which usually means a top
Short-term Up Neutral May need take profit if further up tomorrow
Report Focused On Buyable dip or the market topped?
Today’s Summary Pay attention to the rising CPC.
Too many negative divergences.

Negative divergence, as I’ve been saying, is only a warning not a trigger of action.  However, there are too many negative divergences now which are too obvious to be ignored, therefore I strongly suggest everyone acting cautiously. The bottom line, besides NYA50R, I have not seen any other intermediate term market topping signals, so it’s still possible that the market could go further up.  But before that, I believe a decent pullback will happen.

7.0.2 SPX and CPC Divergence Watch, this is what you should pay attention to tomorrow.  If the market rises and CPC goes up at the same time, it’s prudent to take profit as it’s very likely the market may pullback on Friday.


1.0.2 S&P 500 SPDRs (SPY 60 min).  Bearish rising wedge plus a lot of negative divergence, this chart looks very bearish to me.


0.0.3 SPX Intermediate-term Trading Signals, 1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals.  NYMO and NYA50R are put in the same chart for your convenience.  You can see how the market is overbought in the intermediate term, and how significant the negative divergence is.


1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1470 stocks price up volume down, this is a quite bearish reading.


Lastly take a look at smart Money / Dumb Money Confidence, courtesy of, period.



  1. Good review. My personally developed system combines a multitude of indicators over different time frames and it gave me a sell signal today on the markets.

    Time to tighten up stops on long trades and initiate some decent shorting positions.

  2. Cobra, I just found your blog mid-last week and I can't believe how much I've already learned. Thanks for all your effort. It is greatly appreciated.


  3. Cobra,

    I was researching and I found that $RHNYA at Stockcharts and Zweig uses the some formula.

    My questions is, why today $RHNYA showing ZERO? Is it any wrong data? For example $RHCOMPQ shows a close value today.

    Thanks for your great advices. Using your information I was able to nail down better this market!!!!

  4. Please do not consider me as a trader or stock market predictor….

    I just want the TRUTH to get to everyone and if I find information that can help you I want to share it.

    With that said, I highly recommend you read tonight’s post on my blog

    with the key story:


    Even if you don’t agree with the analysis you should know what the person who called the 1987 and 2007 market drops to THE DAY has to say…. If already posted I apologize….

    Best to all….


  5. Check chart 0.0.2, on the bottom I've given the reason.

    RHNYA = new high / (new high + new low)
    Since new high today is zero, so we got a zero reading. This indicator is useless now as there're too few new highs.

  6. Very interesting indeed, Maximus. Thanks

  7. look at CPCE... seems to have broken...

  8. No, it's not. CPCE data only available after 7:30pm ET. What you see intraday is simply a wrong data.

  9. Cobra,

    I agree with your distrust of the rally here, question is-
    Historically, when we have been in a bear/down market, and then the market turned up from the bottom, do the indicators you mention tend to reach very overbought (negative divergence) levels and stay there for an extended period, signifying themselves that the market has changed from bearish to bullish?

  10. Pw, yes, that's possible if indeed a bull market begins and that's why I keep saying, let the market go first, in case I'm wrong.

  11. Cobra, the markt has declined a lot in a short period of time.
    We can easily consolidate here for a while, then try for the SPX 1000 and sell off.
    Some things now need to be discarted:
    -Big banks are not going out of biz.
    - Countries with surpluses are tryng to create a domestic market or their own demand.
    At this juncture, and as a palpable reality the world clearly suspects that the US are uncapable of paying their debt in a legitimate way. That means they are going to pay for it by printing money.
    -The main investor and partner in crime in the huge indebtness of a once great nation is China..which thanks to it could build a huge and developing country full of technology which they could have never could developed for theirselves in their old regime.
    . An implicit exchange has happened, a trade of cheap and free "stuff", against cheap labor and external investments.
    I do not know what will happen to the US when their debt based economy goes completely bust and they truly lose all the respect of the world-
    Maybe a painly new beginning or years in darkness.
    We will see it.

  12. Thank you for the comment, Gas. :-)

  13. We won't lose TOO much respect here in the US...

    ...Mainly because the EU has screwed up even worse!

    What will be interesting will be the loss of respect for the financial industry in general.



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