This week’s market action has been interesting. Indicators on tech stocks have been bearish. This can be seen in the chart of Invesco QQQ Trust (NASDAQ: QQQ), which is an ETF that tracks an index of tech stocks. QQQ has been the market leader in the bull market that started in March 2020.

I’ve highlighted three points in the chart.

Point 1. A bullish candlestick pattern has formed, but there was no follow through. That’s a cause for concern that the rally is running out of steam.

Point 2. QQQ starts to move upward, but it’s unable to reach a new high, which increases my concern. That indicates the bulls lacked enough buying power to push prices through an important resistance level. This formed a small topping pattern and indicates a decline in likely.

Point 3. At the bottom of the chart, my Income Trader Volatility (ITV) indicator shows a bearish crossover. This previous crossover in April preceded a small decline. In March, a more significant decline followed the bearish signal.

While this chart is worrying, the next chart offers hope for the bulls. SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA) is breaking out to new highs, and ITV is bullish.

What This Means And How I’m Trading It

This divergence between bearish signals for one large group of stocks and bullish signals for another is unusual. It almost certainly indicates a big move is ahead. Unfortunately, the divergence doesn’t offer insights into the direction of that move. For insights into that, we need to watch for follow-through in these ETFs over the next few days. And that’s exactly what I’ll be doing.

I believe the divergence will resolve to the upside in the case of large-cap stocks. And it’s one reason why I recently targeted American Express Company (NYSE: AXP) for a trade over at my Income Trader premium service.

The stock is on a bullish ITV signal. Additionally, the chart pattern is also bullish with a breakout to new highs.

This is a short-term recommendation. Like almost all stocks, AXP is at least fairly valued. Analysts expect strong growth in the company as the economy recovers. Exceeding expectations could push the stock to new highs, but there are risks to that outlook in the long run.

To minimize the risks on the trade, I am recommending a trade that will be open for only a little more than a month. There is little risk of adverse news in that time, and the strength of large caps should persist for several weeks as traders move from aggressive positions to more conservative strategies.

I believe the strategy we use is better than simply buying and holding a stock. It focuses on the short-term and allows us to generate income immediately. This means we can easily move on to another promising trade — or repeat a similar trade in the stock if we want.

This strategy isn’t used by many individual investors — but it should be. It’s so easy that you can think of it like entering a “P.I.N.” code and getting paid from the market.

Want to learn more? Go here to learn more now…