There are different kinds of divergences, some that are meaningful and others that are not that significant. For instance, if new highs are made in the price but the MACD does not make a new high, this is a divergence. The same can be said about new lows. The divergence you are talking about with the MACD moving down ahead of the price is a type of divergence that is not that significant in this market. This can happen for instance during a consolidation and does not need to mean anything more than this. However, some will point to the MACD crossing down through its zero value as being a significant sell signal, particularly if the MACD has not seen values below zero for some time. Furthermore, I see there are resistance values that the MACD seems to respect, and when it breaks through its area of S&R, the price does make a significant move accordingly. The zero level of the MACD is usually where such a S&R is found.
The following MACDs have crossed through its zero value a period of time ago: NASDAQ, Russel 2000, DJTA, and DJUA. The following MACDs are crossing or have just crossed its zero value: DJIA, S&P 500 and S&P 100. The reason I break these two groups up the way I do is that I find resistance for the MACD indicator can come just below its zero value which is the case for DJIA, S&P 500. The MACD of the S&P 100 is just crossing its zero value. The MACDs of the Russel 2000 is crossing support, and of the DJTA has apparently met support since it has flattened out for a period of time now. A look at the charts will provide a clearer picture.
Just my opinions of course.
Bob Graham |
