Is Market Ripe For Correction?
Seeking Alpha Analyst Since 2020
Author of InvestingAngles.com.
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Summary
- Market possibly hit the top on March 17.
- RSI diverges negatively with price.
- Many similarities if compared 2020 with 2021.
Over several months, daily RSI of SP500 has been diverging negatively against the price. If the big picture is compared with the one in 2020, you can find many similarities. This picture, I believe, worth a 1000 words.
At the beginning of 2020, SP500 made three new tops, each top had a corresponding top in RSI. However, the RSI tops were diverging. We all know what happened next.
A similar picture of the diverging RSI tops is happening now. Three tops have been developed and I would like to emphasize that "three" is an important number in Japanese candlestick theory.
If today and tomorrow the index produces red candles, there is a chance of a major correction, somewhat similar to that of March 2020.
I hope I am really mistaken.
Analyst's Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in SP500 over the next 72 hours.
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