The Signal
Thursday (9/8/16), this chart-analysis was sent out as a warning signal to the Club Members, and the News Letter excerpt reads:
"Good morning, Market has been really struggling to breakout to the upside, and the bearish divergence formation continues. This isn't a news for us as we've been talking about it, but I think the longer we stay here moving sideways, there might be a pullback coming in the minor term.."
The Divergence
This technical signal is a good tool to observe the market as they can form Bearish/Bullish divergence (watch this video how I was able to pick market bottom with this signal back in February 15, 2016).
Only tricky part about it is, it's hard perfectly time it because it can grind for much longer than most traders can anticipate.
In this case, I was able to time it well with a warning signal for my members, but only because we've been talking about this pattern quite sometime; and also the "Island Reversal" I talked about on The Market Update video below.
Keep in mind though, this signal is not potent enough to "crash" the whole thing (as it is minor- to intermediate-term bearish signal--so get over the idea with one day decline in the market), but we probably continue to see weakness in the minor-term until this signal gets 'nullified."
As I have been talking about potential level of supports in the video above, I would look for 'buying opportunity' in the next 1-2 months.
The Video
Kay's stock market analysis & forecast focusing on the equity market indices (in that order):
- S&P 500 Index (SPX)
- Dow Jones Industrial Average (DJIA/INDU)
- NASDAQ Composite (COMPQ)
- Russell 2000 (RUT)
- PHLX Semiconductor Sector (SOX)
- PowerShares QQQ Trust Series 1 (NASDAQ:QQQ) (QQQ)
- Vaneck Vectors Semiconductor ETF (NYSE:SMH)