To truly understand the new highs- new lows, I think we have to look at it in conjunction with the Advance/Decline line.
Note the simultaneous spike lows in both charts in september of 2001. That's when the average stock put its lows in. The average stock has been advancing since that point in time.
stockcharts.com[l,a]wallyyay[de][pb7!b25][vc60][iUb14!La12,26,9]&pref=G
stockcharts.com
There is no divergence between the two since then. Only a divergence between the indices and the internals.
And the 3rd part of the puzzle is the major indices.
stockcharts.com[l,a]wallyyay[de][pb7!b25][vc60][iUb14!La12,26,9]&pref=G
On the SPX, the low was not reached until october of 2002.
The last time we saw a divergence of the same magnitude, it was a negative divergence, and it occurred through half of 1998 and all of 1999.
The A/D line and the average NYSE stock made it's bottom in Oct. 2001, and the SPX made it's lows over a year later. Major positive divergence.
1)Recognize opportunity,
2)Take action,
3)Be patient,
4)Take profits. So far the plan is working..
There's also 4a: Pay taxes. But that's getting a little lighter, I understand.
Prepare for the end of month rally.. |
