Hourly Bearish Divergences

Today 10/22/21 both the S&P 500 (SPX) and the Dow Jones Industrial Average (DJI) made new all-time highs breaking the “Rule of Majority” signal noted the  prior blog.  This is additional evidence that the intermediate path for US stocks is bullish.  Shorter term momentum evidence strongly suggests a correction of recent rally is imminent.

The 60 – minute SPX chart courtesy of Trading View illustrates short-term momentum.

SPX – hourly RSI had a significant bearish divergence as the SPX made a new high.  Additionally, on 10/20/21 hourly MACD had a bearish lines crossover.  At  the SPX 10/22/21 high MACD – Histogram was negative.

The best Elliott wave count since the 09/02/21 peak appears to be  forming a Horizontal Triangle.  This particular type is a Running Horizontal Triangle, in this formation  wave “B” marginally exceeds the Horizontal Triangle point of origin – the 09/02/21 peak.  

Traders are 50% short SPX related non-leveraged funds from the open on 10/20/21 with a stop of half the position on a move above SPX 4560.00 The SPX high on 10/22/21 was 4559.67.

Continue holding short.      

Published by Mark Rivest

Independent investment advisor, trader, and writer. Articles have appeared on Technical Analysis of Stocks and Commodities , Traders.com Advantage, Futuresmag.com, and Finance Magnates.

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