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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude -- Ignore unavailable to you. Want to Upgrade?

To: Jan Robert Wolansky who wrote (10842)	1/18/1998 12:20:00 PM
From: Doug R	Respond to of 79317

Jan, The situation you describe, divergence, is a tricky thing to gauge. Often, you will see a lower top in an indicator at a higher price that is followed by an even higher price and the indicator does at that time make a new high. The classic sign of the price topping out using divergent price/indicator tops is: 1. A price high and a high for the indicator. 2. A new price high on a lower indicator high. 3. A 3rd price high with an indicator high that is lower than the first but higher than the 2nd. At #3, the risk/reward ratio is no longer in your favor if long the stock. Many times you may also see a fourth price high and the indicator high will fall somewhere in between the 1st and 2nd indicator highs again. That is a screaming sell signal. Doug R