The Emini closed up 3.00 points at 1,462.00 on Tuesday. Although the Emini started the day down and falling, it eventually found support at 1,452.25 and bounced on higher volume and ended the day up – a typical "bear trap" day. However, beware the low Emini volume of the last 3 days and a TRIN indicator divergence pattern shown on the chart below.
The adjusted Trading Index (TRIN) indicator reading today was 58 and a new high was made. However, last Thursday the adjusted TRIN indicator reading was 162, giving us a bearish divergence pattern. This pattern is highlighted on the chart above with rising prices and falling TRIN indicator readings (red trend lines). A similar pattern occurred at the beginning of January 2007.
My use of the Trading Index (TRIN) indicator data is somewhat unconventional. You can read about the simple mathematical adjustments I make to the raw data that make it much easier to interpret TRIN Indicator data here.
We've now had a nice bounce in the market over the last week from the low of 1,435 made last Tuesday up to yesterday. I have to admit that I was surprised how quickly the market turned last week. It would not be surprising to see some professional profit taking coming in, as non-professionals get sucked back in on new highs.
Note: Starting today, I will be sending out full text articles, rather than summaries, as an experiment. I hope you like this change. Also apologies for not posting more frequently over the last two weeks – I was having too much fun snowboarding in Japan.