A Negative Divergence — An Example From KMRT

  • October 6, 2004
  • Tsutae Kamada

Everyone, maybe almost
everyone, wants to sell at the top and buy at the bottom. I know it
is impossible, but studying a well-known indicator can give us early signals.

11:10:13
(From TradingMarkets TradersWire)

 Intermediate-Term Setup Alert


Kmart (KMRT)
is beginning to form a bearish tail on its weekly chart. Notice, the 14-period
RSI is negatively diverging. KMRT is down 91 cents at 88.29.   

What you want to see is a new high is confirmed
by the RSI. It means the indicator also needs to hit a new high. How do you
short KMRT? There are more than several ways to do it. You can wait for a
violation of a moving average, or a support line.

Let me refresh your memory. Do you see it?

Have a nice afternoon session!

T.Kamada

If you have questions, feel free to mail them to me.

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