DecisionPoint has been on a roll or our indicators have been. Most notable, last Wednesday we let DP Alert subscribers know that a downturn was likely. Thursday the market fell out of bed. We mentioned yesterday to subscribers of the DP Alert that due to short-term indicators being so oversold and finally turning back up, we should see a rally today. We also mentioned yesterday that positive divergences were materializing.
We have found that one of the critical determinants of a major market bottom is a positive divergence between price lows and New Lows. We weren’t quite seeing that on the SPY New Highs/New Lows chart. However today we decided to take a look at the NYSE and Nasdaq New Highs/New Lows charts. We saw stunning positive divergences that had to be presented not only to subscribers, but also to our followers with a free article.
The SPY is seeing a very short-term positive divergence between price lows and New Lows over the past three days, but it didn’t see a positive divergence using May and June lows.
However, check out the NYSE and Nasdaq. Clear, strong positive divergences.
Conclusion: Add this to our already oversold short-term indicators and you have a recipe for a bear market rally. These divergences called the 2020 bear market low, but we don’t believe that the bear market is over yet.
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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin
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