Divergences Galore

Today, SPX made a new high. However, MACD is forming the first divergence. See this chart:
Furthermore, the VIX (see below) did not make a new low. In fact, on a highly bullish day, VIX actually rallied. This is the second divergence:
Finally, XLF has not come close to making a new high to match SPX. This is the third divergence. 
Looks like a fakeout rally to me. Good luck!


Anonymous said...

Hey Narayana,

I see you're still holding on to your fade the rally til you go broke mentality. The rally will end when most bears are broke or have lost 90% of their capital, at which time, being right and sticking to your bearish conviction will hardly have paid off.

Things may appear to be setting up a certain way but it's hard to win when the thieves know what you're waiting for and they're willing to roll their positions until they outlast you OR the really big, dumb money finally starts going all in again. Are we at that point yet? Getting closer but not yet if you ask me.

When does the obvious ever play out as perfectly as it should?

Narayana said...

On the other hand, those patient enough to wait out the rally usually wait out past the end, and then never get in because the market starts dropping and gets away from them :).