I often state that divergences are merely a function of the fact that a trend has been losing momentum & they help to indicate a trend change is likely (but not guaranteed) to come & that divergences are NOT a buy or sell signal, simply a development to be aware of to provides a heads up for a potential trend change. Over the past year we’ve had plenty of sell signals on the 60m charts & a couple of the daily charts, with most (but not all) of those resulting in tradable corrections commensurate with the time frame (i.e.- 60m charts are typically good for short-term trades lasting days to weeks). However, the longer-term trend indicators & charts remain bullish for now although the divergences on the weekly & monthly charts continue to build.
Why I highlight those divergences is simple: Here’s a 60-year monthly chart of the S&P 500 highlighted the negative divergences on that time frame with the magnitude of the corrections & bear markets that followed each DH in red. While divergences can be ‘negated’ or taken out, more often than not they do end up playing out for a trend change & those corrections (or rallies following a DL) are often commensurate with the scope/magnitude of the proceeding divergence.

Yep, thx for pointing that out. LQD broke down below an uptrend line comparable to the one that TLTjust broke down from. More downside to come in both which means higher L/T interest rates.

email me? nitins1921@gmail

I too am rather tired of hearing about negative divergences for so long!

Not disputing that the divergence likely exist as the charts say so, but being constantly sour on the macro while the indexes continue to move or as in past 3-6 months the rotations have provided many opportunities which traders influenced by continuing negative outlook did not look at or participate in.

Trading way risky thinly traded commodities such as Wheat, /NG etc is not what makes up for missing out on 2-5% week-or-two rotations in big indexes / sectors such as XLF, XLE or XLU as recent examples where one could have swing traded to some profits without resorting to exotic tickers…

I keep reminding myself that we have to learn to trade the market we have or likely to get rather than one we wish for (or simply keep out market due to increasing negative divergences!)

@nitins1921
Do you have the long-term acct?

Literally the same thing. Negative divergences building for forever and $QQQ up 35+% since then. Not saying I don’t agree with the analysis. That’s my bias now. Bet on the positive side of so many stocks and one would be up so much by now.