Near-Term Divergence Ends Between Swenlin Trading Oscillators (STOs), Intermediate Term Remains


On Monday's MarketWatchers LIVE program during the "DecisionPoint Report", I highlighted a divergence between the Swenlin Trading Oscillators (STOs). I admitted that I hadn't seen a divergence lasting over a day or two. These are short-term indicators that generally travel in concert. The difference between them is that one is based on breadth (advances/declines) and the other on volume (advancing/declining volume).

This divergence began last week and ended today. Seeing the divergence between the STO-B and STO-V with the volume indicator moving lower suggests that volume wasn't behind the current rally. The near-term divergence ended with the STO-V moving up today. However, an intermediate-term divergence isn't out of the question. If we see a higher top on the STO-B and a lower top on the STO-V, that wouldn't bode well for the next few months. On the bright side, the ITBM and ITVM (intermediate-term indicators) are floating higher. If the ITVM tops below the October top, that would signal another divergence but in the longer term.

Conclusion: I'll be watching (and reporting) closely as these indicators continue their travels. We haven't see a divergence of STO tops in the last year. If we do get a divergence, the caution flag will be raised and waved.

Helpful DecisionPoint Links:

Erin's PMO Scan

DecisionPoint Shared ChartList and DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)


SCTR Ranking


Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin

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Erin Swenlin
About the author: helped create and manage the website alongside her father, Carl Swenlin. Together, Erin and Carl launched the DecisionPoint daily blog in 2009. She hosts the MarketWatchers LIVE web show at, and is also a Member of the CMT Association. Learn More
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