Momentum Lags While Markets Continue Higher

Momentum Lags While Markets Continue Higher
By Mike Paulenoff, (

In my world (starting to feel a lot like "Wayne's World"), I usually don't see this many momentum non-confirmations while the price structure makes new highs! Momentum peaked on September 5 with the SPDRs (SPY) at 131.85. Each successive new high within the upleg off of the July 18 low at 122.39 -- at 132.45 on September 13, 132.77 on September 20 and 132.85 today -- my RSI momentum gauge made lower highs!

In the past, when this type of "set-up" emerged, one of two results occurred: either a very serious price implosion that confirmed that prices were on borrowed time, or a powerful upside explosion in prices that spiked the RSI upward very quickly to adjust the lagging momentum situation.

Right now, my work is telling me to remain positioned for the former, but not to add to short positions until ruling out the latter. That will only occur on a break of the near-term triple bottom low at 131.00, or on a downside exhaustion reversal from a gap-up to new highs.

Based on today's strong close, we could have some answers within 24 hours.

Mike Paulenoff is author of the ETF Trading Diary (, a real-time diary of his technical analysis on equity markets, futures, metals, currencies and Treasuries.

  • Action-Oriented Trade Set-Ups in Stocks & ETFs
  • Macro Analysis of the Broader Markets
  • Detailed Technical Guidance for each Trading Idea
  • Live Interaction w/ Mike & Our Member Community
  • And Much, Much More!
Join Now! - Special Offer!
Veteran Wall Street analyst and financial author, Mike provides detailed and timely analysis and trade set-ups on a range of markets. Read more...

Have Mike's “Out Front” morning analysis delivered FREE to your email inbox twice weekly!