Loving the $SPY Rally - Not Loving the Negative Divergences

Whilst not being bearish at the moment, because the stock price is the most important indicator, one has to consider other indicators to get an understanding of the underlying flow of supply and demand. As a technical analyst, you are taught that you should use different indicators to be able to understand if the direction of the price trend is supported by the underlying supply and demand. Typically you should use a price indicator and a price volume indicator. In this instance, I am using RSI, ROC and Chaikin Money Flow (which is a price volume indicator). Here, we can see clearly 3 indicators all different in nature, and they are all diverging with the price direction. Price is moving up. But the indicators show New Highs, New Lows and News Highs Lows compared with volume (all are focused on supply and demand) are going down. As Charles Dow with DOW Theory suggested the indexes need to confirm. So it is with professional chart analysis, the indicators need to confirm.

And right now they suggest a medium term pullback, not today or even tomorrow, but sometime soon.

I am still long for now, until the Liberated Stock Trader Crash Detector System (Red & Green Horizontal Line / Dots Below Price) tell me otherwise.

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