Divergences can last for extended periods of time, and SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is currently in an uptrend. The low correlation with iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM) is not a reason to sell, but it is a reason to take any sell signals seriously. The low correlation could be a sign that the smart money has been selling emerging markets ahead of a global slowdown.
Traders should watch the stock market closely. A breakdown in SPY below support at $163 could be a signal that a steep decline is ahead in the short term.
In addition to the troubles in emerging markets, the S&P 500 is reaching the peak of what market experts have historically called a “Triple Top,” which has preceded previous market crashes. Click here to learn how to protect your assets from a collapse, and even profit while others lose their shirts.
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