July 17, 2023

Volatility Reports 7/17/23

There is nothing in traditional technical analysis that is bearish. Everything is mid-range.

Starting with RSI on the S&P coming off triple divergences, which happened throughout the bull run of 2019. Same with the FANNG index. Shares above their 200-day moving average mid-range, lots of room for the advance to move higher before its overbought. That includes all the majors in the states both daily and weekly bars. Add to that the percentage of exchange and OTC members that are above their 50-day is midrange with plenty of room for more sure fire buy the tip advance.

During the advance that started October 13, 2022, the Arms index (TRIN) has not turned the tide of the rally after six overbought readings with divergences the current period being the seventh.

The McClellan summation indicator – not optimized – is overbought but has not rolled over on its moving average, a lagging indicator anyway.

The accumulative A/D line has been diverging for months, and while the perma-bulls hung their hat of this old line go to concept at the end of the 2019 advance, as Joe Granville pointed out from the 1960s and 1970s bull markets sustained for the longest period in the face of this divergence. In fact, the market based on his observations would alternate their periods of long-term divergences. That is the case with this bull market, with the S&P A/D making new highs without the averages. But that is a situation when the bulls will suggest a catch up by the SP to the AD undernourished NASDAQ.

Given the experience provided by the numerous false flags generated by a wide variety of the above-mentioned indicators how died in the wool bulls lean on such evidence only when it suites their point of view.

This work by Jack Cahn is licensed under a Creative Commons Attribution-NonCommercial 4.0 International