The S&P 500 advanced after the second-quarter earnings season, but its RSI weakened instead of strengthening, creating a bearish divergence that BIT said has historically appeared before pullbacks of about 10%.
BIT said an RSI move below 50 would typically signal further weakening momentum, while a reading closer to 30 would suggest the market is moving toward oversold territory, a condition that has at times been followed by rebounds. With roughly two months until the U.S. midterm elections and expectations rising that the Federal Reserve could tighten policy further, U.S. stocks may be entering a period of higher uncertainty. A moderate correction could help the market absorb earlier gains and potentially support a rebound after the midterm elections.
S&P 500 RSI Divergence Signals Rising Risk of Short-Term Pullback
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