Gianni Di Poce just flagged a divergence that changes the playbook for Q2. Stocks dropped to new lows this week. The VIX never confirmed the move.
VIX cash and VIX futures both refused to make new highs while the market was making new lows. That disconnect is one of the most reliable signals that downside momentum is fading.
Gianni spotted the same setup in the Magnificent 10 index. Price hit a new low, but the RSI indicator did not follow. Bullish divergence like this often precedes a trend change in the broader market.
The Nasdaq has now dropped for five consecutive months. Today’s 2.5% rally came after stocks took out Monday’s lows and reversed hard to the upside. Reports that Iran is looking to conclude the war with guarantees triggered the move.
Gianni is still carrying a lot of cash. He’s not calling the bottom yet. But he laid out a clear framework for what happens next.
In tonight’s video, Gianni breaks down:
- The Mag Seven rallied 4.25% and the Mag 10 surged 4.5%, both showing bullish RSI divergence that signals waning downside momentum
- Oil sold off on the Iran headlines, and if energy prices stop rising, that removes the biggest headwind for bulls right now
- The dollar is backing off against both the euro and the yen, while bond yields are dropping. Gianni called this the best development bulls could ask for.
- Agricultural commodities are becoming the next opportunity as fertilizer shortages force farmers to shift crop planting, creating supply disruptions in the grain markets
- Credit spreads flashed problems last week, but early signs of improvement are showing up to start this week
Gianni’s bottom line: if we get one more drop to new lows, that is the dip to buy. But be ready to pivot on a dime.
