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Vanguard High-Yield Corporate Message Board

  • bowonwing bowonwing Sep 30, 2009 2:05 AM Flag

    Overall market technicals- two negative signals, alert for further weakness.

    Overall market technicals- two negative signals, alert for further weakness.

    The S&P500 @1060 $SPX), the Dow Jones Industrial Average @9742 $INDU)
    and the Wilshire 5000 Composite Index @10987 $WLSH), technically are
    all having:
    1. MACD "negative divergence," and

    2. A Bearish moving average crossover.

    This can be seen at www.stockcharts. com and is taught at the
    Chartschool at that website.

    1. A MACD negative divergence is when "the security advances or moves
    sideways, and the MACD declines. N.D. are probably the least common
    of the three signals, but are usually the most reliable, and can warn
    of an impending peak."

    2. A Bearish moving average crossover "occurs when MACD declines below
    its 9-day EMA (the signal line)." This is the most common signal for
    MACD. (The third signal is the "Bearish Centerline Crossover.")

    These two negative signals together are a powerful indication that the
    overall markets have slowing momentum and should serve as an alert to
    monitor the technical situation for further clues of weakness.

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