We have two primary indicators in the short term (Swenlin Trading Oscillators (STOs)) and two primary indicators in the intermediate term (ITBM/ITVM). Of late they have been diverging with the short-term STOs moving lower and the intermediate-term ITBM/ITVM rising. We’ve included the chart below so you can see more clearly what we’re talking about.
While it is positive to see the ITBM/ITVM rising, they have gotten extremely overbought, particularly if we’re still in a bear market (which we believe we are). The STOs moving lower and sporting negative divergences with price leaves us less bullish in the short term.
Conclusion: So what do we make of this? We believe there is more upside potential, but now a breakout above the June top is critical. If price turns down here as the STOs seem to think it will, the decline could be difficult with the strongest support level at $390.
Good Luck & Good Trading,
Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin
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Erin Swenlin is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master’s degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor’s degree in Mathematics from the University of Southern California.