Above is a weekly chart of the homebuilders ETF symbol XHB. The blue line is the S&P500. As you can see both markets have been moving higher TOGETHER for the past few years until now. If you look closely at the chart you will notice that the S&P has made a new swing high while the homebuilders have made a lower high. This is a bearish negative divergence and is a sign that we should see further weakness (in my opinion) in the homebuilders over the next couple of months.
Saturday, July 26, 2014
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