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The Daily Chartist: An Incomplete Rally

With all the negative divergences that are accompanying it, this rally might not do as much as expected.

June 21

It is likely that the rally which began with the


announcement on Wednesday will continue for a while longer. It will run its course, moving higher despite all the negative divergences that are accompanying it. These negative divergences include a failing number of stocks at new highs, a lagging advance/decline line and a nonconfirming

Dow Jones Transportation Average

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A real bottom is accompanied by positive divergences (i.e., nonconfirmation on the downside), something we did not see during last week's low. Typically, when a market rallies off an incomplete bottom, the ensuing highs are incomplete as well. Unless the internal statistics change drastically over the next several days, I believe this rally will fail.

New Highs and New Lows

Overbought/Oversold Oscillator

Cumulative Advance/Decline Line

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at