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6.22.13 Saturday

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$IWM Daily Bearish Divergence

[MACD]

MACD bearish divergence is confirmed as it created lower high and now rolling over.  Divergence is not clean as I would like to see it but sentiment is definitely there.

[Full Stochastic & RSI]

Stochastic and RSI’s main function isn’t identifying divergences but when it is confirmed with MACD, MACD divergence becomes more potent.

$VIX Weekly Bullish Divergence

[MACD]

This is a very alarming sign for the equities.  This is like a time bomb ready to go off any moment here.  As you can see once $VIX clears recent resistance point on the chart and MACD, this thing soars and that means fireworks for the equities. Also this weekly bearish divergence has been forming over year and three months period of time.  That’s a long time for this kind of divergence to form and because of that I think the outcome will be more severe than the last two occasions showing on this chart.

$SDS (S&P 500 Ultra Short) Weekly Bullish Divergence

[Full Stochastic, RSI, MFI]

We do have much grinding divergence on Stoch and RSI so I am not putting much weight on it but I am putting much weight on MFI (green).  As you can see, last 2011, when $SDS started hitting the lows, MFI started soaring and that was the initial signal before a huge thrust higher.  Today very similar action is showing on this weekly chart here.

$SPY Weekly Bearish Divergence

[MFI]

This chart confirms what $SDS weekly chart is trying to convey at the above chart.  $SPY continued to travel higher but MFI continued to decline lower indicating “real money” isn’t in on this recent move.  This is also a very alarming signal for the equities.