DecisionPoint

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

Erin Swenlin

Erin Swenlin

Co-Founder, DecisionPoint.com

DecisionPoint Alert Logo

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)

ITBM and ITVM

SCTR Ranking


 

Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin


**Don't miss DecisionPoint Commentary! Add your email below to be notified of new updates"**


 

Erin Swenlin
About the author: is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master's degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor's degree in Mathematics from the University of Southern California. Learn More