Finally, Clorox. Clorox is one of the few stocks you can find right now that is showing divergence in upward momentum. This happens when the price drops. Look at the low lows throughout September, with the lowest point in 52 weeks at the start of October, but look at the upward bias of momentum.
So, we have lower price lows and higher momentum (RSI) lows. This is an upward reversal. A possible upward reversal, I should say, wouldn't you say? The improvement in momentum while the price is recording lower lows suggests that we may have reached a point of exhaustion for the downtrend.
This is the type of chart I rarely put in my investment portfolios, because I prefer to wait patiently for the trend to turn upward, but the divergence of upward momentum may indicate our desire to start small and bet on a possible reversal.
Now, how can we approach this matter in a more conservative way? If you are still not convinced, this is the perfect time to look at an indicator called the MACD or PPO. I'll show you what that looks like.
We will change the bottom panel and select the "MACD" indicator, okay? This indicator is one of the trend-following indicators. It was designed to intersect when the trend begins to reverse slightly.
If you look, just today, or maybe yesterday, we have a buy signal on the daily MACD indicator. This may confirm a strong rebound from the bottom level. This relationship is where the stock is in a downward direction, with a divergence in upward momentum, followed by a buy signal from the MACD indicator.
This (1-2-3) sequence is one I've seen many times at the lowest levels of the major markets. The proof is in the price. We will need to see a continuation of the upward trend to confirm that breakout, and perhaps to accumulate more and complete the financial position.
But as an initial trade based on that divergence and the MACD buy signal, it is something worth watching at the beginning of October.