This 4-pack looks at the Dow Jones Home Construction, Banks, Junk Bonds and the S&P 500, highlighting that bearish divergences took place in 1999 and 2007 at each (1). These assets were sending bearish topping messages “BEFORE” the tops in 2000 and 2007.
Looking at this year, each asset has been creating bearish divergence since early 2018 at each (2).
Are each of these assets sending an important risk-reward message again or will it be different this time?
The majority of stock indices remain above respective February lows at this time, as they remain inside of horizontal trading ranges!!! If these ranges break to the downside, the odds increase that the divergences have been sending important messages to stocks for months.