I too am unsure of the MACD divergences you speak of. The old saying -"A picture is worth a thousand words," is quite true.
A picture with an explanation is probably worth 10 times that.
Here's my bearish divergence picture, with words:
decisionpoint.com
<<The 1% EMA is a significant momentum indicator. Stan Weinstein refers to a 200 day simple moving average (very similar to the
exponential average) in his book, and suggests that it gives BUY and SELL signals when it crosses the zero line. That is one way to use
it, but the problem with that is you miss too much of the move, and you do have to watch out for whipsaw. (We have charts in the Long
Term Index Library going back to 1970 on this indicator.)
I find it much more useful to watch where it tops and bottoms. For example, in 1990, when the Dow made two successive new highs,
the 1% EMA was topping BELOW the zero line. The 1990 Bear Market followed immediately after the second top. Again in late 1994,
as the Dow was putting in a double top, this indicator was topping below the zero line. The market subsequently went to its final low
prior to the monster rally of 1995. >>
Though we have not seen this play out fully yet, it looks highly likely to me that the current 1% A/D line is going to top out below the zero line, in conjunction with a new high in the major indexes.
Firmly in the bear camp,
TW |
