Apr 24, 2012

Market Correction Close To An End

Since its peak at 1421 S&P index has given up 4%. Clearly markets are in correction mode in the beginning of earnings season. The question is how long it could last. One technical pattern such as divergence between index value and any other technical indicator could be used to determine a change in trend direction. 

Recently divergence has been spotted in the S&P500 chart between the index and moving average convergence divergence indicator. Usually this technical pattern is a sign for trend reversal, which means that current correction might be at the end. Breakthrough under the resistance line, however, is possible if markets remain pressured by fundamental instability coming from Europe’s fragile financial and political situation. Last could be market concern for the near future.

The market showing reversal sign
The market showing reversal sign
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