What you see above is the weekly chart of the Dow, heading towards the 2002 lows or perhaps lower…good, infact very good! This I feel will finally be a bottoming out process, but that’s not what I am looking at, I am looking for a divergence on the weekly chart to finally happen, making a case to go long. Anyways as things stand they are pretty oversold and perhaps a short covering rally (a lil bouncy) is in the order.
The chart below is the daily, once again I have highlighted a favorite setup of mine; the Divergence. In this case the red arrows marked, are an example of reverse divergence or as some prefer to call it hidden bearish divergence. I wouldn’t say it’s prudent to short here coz we are already way below the value zone (stretched below the MA’s), infact its time to cover your shorts or at least be agile with your stops to protect those profits. In Short (pun!!!) there is no place for baby bears right now!
Like I mentioned in one of my earlier posts that a friend of mine commented about the divergence between the Baltic Dry Index (chart courtesy Investment tools) and the SNP, I thought I might as well put up the chart here. What the heck with this divergence and hoping to get a positive divergence on the weeklies, who know we just might have ourselves a nice rally!!! Wishful thinking??? Yeah it is…didn’t I tell you once, that hope lays eternal in a Bull’s heart!
"I can accept failure, but I can't accept not trying." Michael Jordan
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