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Tuesday, August 06, 2013

The S&P 500 is Plagued with Divergences

http://www.optionstradingsignals.com/the-sp-500-is-plagued-with-divergences/

By now everyone has a prediction about where the S&P 500 Index (SPX) is going to be heading in the future. Most of the sell side and their ilk are all rolling out the green bullish carpet and predicting that a major bull run is right around the corner.
I am a contrarian investor by nature and I tend to sell when others are buying.  When retail investors are buying and the professional sell-side is quickly reducing their long equity exposure I get increasingly more bearish. A recent report from Zerohedge shown here, was accompanied by the charts shown below courtesy of Bank of America Merrill Lynch:

Chart

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