The Phaserl


The Stock Market Gets Indigestion

by Pater Tenebrarum,

Technical Divergences Finally Matter

Below we show a few charts that illustrate that the market’s character may be changing. If that is indeed the case, then we can conclude that the plethora of potentially bearish technical divergences we have pointed out in previous missives could finally begin to matter. In other words, the market may be on the cusp of a bigger correction, as opposed to the brief pullbacks that have become the ‘norm’ this year. Before we discuss why the market has declined and whether that even matters, let us look at the technical picture. The S&P 500 Index is one of several in which the above mentioned ‘character change’ seems fairly obvious (others are for instance the $NYA and the Dow Industrial Average). As you will see further below, the same cannot yet be said of the small cap index Russell 2000 and incidentally also not of the NDX, which is one of the few indexes that have not broken their 50 day moving average in the recent swoon (not yet, that is).

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