As the S&P 500 continues to ride the top of its trend channel, a few momentum divergences have appeared that may suggest the continuation of last weeks pullback.
MACD and RSI have been diverging from the broader market trend. So too has my favourite short termed money flow indicator – shown at the top of the chart as Chalkin MoneyFlow Oscillator. Further, the seasonality of August can be iffy, as mentioned in my blog a couple of weeks ago. The long termed average for the S&P 500’s return over August is 0.0%, according to Thackray’s guide.
While the short termed indicators do suggest the potential for a bit more downside, the bigger picture remains intact. Higher highs and lows on the S&P 500 as it remains within its bullish trend channel offer no hint of slowing. The longer termed money flow indicator shown in the bottom pane (Accumulation/Distribution) also continues to trend up. Thus, any correction or choppy movements noted this month might be used to accumulate technically and fundamentally superior stocks.