📈 Monthly Reset

Let's review some monthly charts.

Monthly Charts

At the end of each month, you should be zooming out and looking at indexes and stocks you’re interested in at the monthly level.

This gives you better perspective on where the market is at vs. the weekly, daily, and smaller timeframe charts we look at more frequently.

Let’s see where we’re at.

On the S&P 500 we have a hammer that formed in August which looks good.

Looking at the RSI, you can see that we do have a negative divergence that has developed, with the S&P hitting highs while RSI has been declining.

On longer timeframes, this is something to note, but it’s not something to necessarily act on immediately because these negative divergences can take a long time to play out and you don’t know when it will correct itself.

So overall the S&P is in a good place but we do want to watch the 70 line on RSI.

It is essentially the same story on the Nasdaq, with a dragonfly forming on the monthly but a negative divergence forming.

Note that on the Nasdaq we are very close to that 70 line on the RSI. We really do not want to break below that because it can lead to more selling. Usually the 70 line can provide support.

Keep these in mind as you move forward trading in September and remember to check back on these charts as the days and weeks go on.