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Thursday, March 28, 2024

Industrials: A Divergence Resembling 2007 and 2011

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.


Sometimes diverging momentum can be a sign of a short-term high in the markets. The Industrials ETF XLI experienced falling momentum while prices were moving higher back in 2007 & 2011 at (1), which resulted in lower prices in months to come, once support and its 200MA was broken to the downside.

At this time the bullish trend in XLI is in place, as it remains above support off the 2009 lows and above its 200-day moving average.

Of late, a divergence is taking place as momentum is falling while XLI remains above support at (2). As mentioned before, the trend remains up for XLI. With momentum heading down recently, it becomes important that XLI remains above support and its 200MA!

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