Some times diverging momentum can be a sign of a short-term high in the markets. The Industrials ETF XLI experienced falling momentum while prices were moving higher back in 2007 & 2011 at (1), which resulted in lower prices in months to come, once support and its 200MA was broken to the downside.

At this time the bullish trend in XLI is in place, as it remains above support off the 2009 lows and above its 200MA line.

Of late, a divergence is taking place as momentum is falling while XLI remians above support at (2). As mentioned before, the trend remains up for XLI. With momentum heading down recently, it becomes important that XLI remains above support and its 200MA!

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