Divergence

: The bearish divergence was flashing a yellow light for stocks as far back as two years ago, but it didn’t turn red until a couple of weeks ago, when the S&P 500 SPX, -1.53% broke below support at the January low, according to Market Watch. Bearish divergences don’t necessarily suggest investors should sell, but they do warn that when a breakdown in price does occur, they should not fight it. The long-term bearish divergence in the S&P 500 chart suggests it is still much too soon to try to pick a bottom. The pattern now indicates the index could fall a lot further before the opposite bullish divergence appears. One way chart watchers use the RSI is to watch for when the RSI trend moves in the opposite direction of the price trend it tracks. The Relative Strength Index technical indicator, which compares the magnitude of recent gains with the magnitude of recent losses, is used by chart watchers to gauge the momentum of a market trend. (news.financializer.com). As reported in the news.