If you are a trader, you probably have watched the movie about Wall Street - Margin Call.

I liked it a lot, and one sentence struck me. One of the main characters, the CEO of the company, played by Jeremy Irons, says: I know three ways to make money in this business (trading): be the smartest, be the first, or cheat…. Very dynamic movie, highly recommended!

“Be the smartest, be the first or cheat”

Since I do not cheat and there are a lot of guys(traders) smarter than me, that leaves me with only one option….. Be the first! This is the reason why I focus on divergences which are among the strongest signals in technical analysis.

Let’s look at the chart to see how we can be the first…..

STI Open: 2,823.09

STI High: 2,829.64

STI Low: 2,740.36

STI Close: 2,793.15

Price Change: -39.49

Percentage Change: -1.39%

STI broke thru 2,800 and traded as low as 2,740 before rebounding off its lows. I have mentioned in my last review that 2,700 – 2,740 is the next level which proved that it is a strong support for STI.

Daily chart MACD histogram is ticking up and STI is slightly below 2,800 level. If STI move back 2,800 level, it will be a false downside breakout. That, I think, may provide a good buying opportunity.

But will it break through, confirming a new uptrend, or hold or break down, indicating that the multi-months correction is likely to continue? Man, I need a crystal ball… but in its absence, I'll continue to trade very conservatively and short-term.

Best wishes for the week ahead.

Divergence Trader

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