SPX !GT50SPX DIVERGENCE

[TREND1]

%Above 50-day EMA Forms Small Divergence by ART HILL

Bullish divergences occur when the index forms a lower low and the indicator forms a higher low. The chart shows S&P 500 %Above 50-day EMA (!GT50SPX) with bullish divergences in January-February 2016, March-April 2018 and October 2018. The higher low from August-September 2015 was not a divergence because the index also formed a higher low.



Overall, a deep dip in the %Above 50-day EMA indicator shows strong downside participation.

A subsequent dip and higher low shows LESS downside participation (fewer stocks breaking below their 50-day EMA).

This could lead to a near-term bottom with confirmation on a break above the 50% level.

Currently, we can see a divergence from mid October to late October, but the indicator remains below 50%.