{"id":19745,"date":"2022-05-23T07:30:46","date_gmt":"2022-05-23T11:30:46","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=19745"},"modified":"2022-05-23T07:30:46","modified_gmt":"2022-05-23T11:30:46","slug":"dipping-a-cautious-toe-into-the-water","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/dipping-a-cautious-toe-into-the-water\/","title":{"rendered":"Dipping a Cautious Toe Into the Water"},"content":{"rendered":"

The S&P 500 has fallen for seven weeks straight. The index was above 4600 near the end of April.<\/p>\n

It closed on Friday at 3900 – a drop of more than 15%. And it registers as one of the worst seven-week performances for the stock market… ever.<\/p>\n

During this entire period, as the broad stock market was falling many of the technical indicators we follow were dropping right along with it.<\/p>\n

The S&P 500 would fall to a lower low, and all the momentum indicators fell to lower lows as well.<\/p>\n

That changed last week…<\/p>\n

It’s subtle. But if you look closely at the following chart of the S&P 500, you can see some positive divergence on the technical indicators at the bottom (MACD<\/a>, RSI<\/a>, and CCI<\/a>)…<\/p>\n

\"\"<\/p>\n

(Click here to expand image)<\/a><\/p>\n

While the index dropped to a lower low, technical indicators like the MACD, RSI, and CCI all held above their previous lows.<\/p>\n

This sort of positive divergence is often an early warning sign of an impending change of trend from bearish<\/a> to bullish<\/a>.<\/p>\n

Indeed, there was positive divergence on this chart back in mid-March. That set the stage for a two-week-long rally that powered the S&P 500 10% higher.<\/p>\n

For most of the past seven weeks, I’ve been watching this daily chart of the S&P 500 for signs of positive divergence that could help set the stage for another oversold bounce, or perhaps a more significant rally phase. And up until last week, the signs just weren’t there.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Now though, there’s a reason for bullish traders to be hopeful.<\/p>\n

Of course, it’s no guarantee. A continued decline in the S&P 500 this week could easily push the technical momentum indicators to lower lows, thereby wiping out the positive divergence.<\/p>\n

So, there’s still plenty of reason to be cautious.<\/p>\n

But for the first time since the current decline phase started at the end of March, the technical indicators are holding above their previous lows.<\/p>\n

That’s a potentially bullish sign. And it’s reason enough to dip a cautious toe back into the market’s water.<\/p>\n

Best regards and good trading,<\/p>\n

<\/p>\n

Jeff Clark<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

In today’s mailbag, Jeff Clark Trader<\/em> Greg member shares his thoughts…<\/p>\n

\n

I’ve already subscribed about a week ago. I’ve never traded options but have done a lot of reading on them. However, it’s been a while. If I’m understanding this correctly, Jeff will use the ticker symbol GDX for every recommendation and he will tell us when to place it and when we should get out.<\/p>\n

I reopened a TD Ameritrade account today, and I’m excited to finally have a coach whose record speaks for itself to learn from. <\/p>\n

– Greg C.<\/strong><\/p>\n<\/blockquote>\n

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming \u2013 and send us any questions \u2013 at feedback@jeffclarktrader.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

There\u2019s a reason to be hopeful…<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-19745","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19745","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=19745"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/19745\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=19745"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=19745"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=19745"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=19745"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=19745"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=19745"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=19745"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}