Joshua M Brown, the Reformed Broker, discusses divergences in stock market indicators. People often attribute significance to two or more events occurring together when there is no significance. So just because volume declined, the S&P went up, but some stocks went down, doesn’t mean the market is about to fall, or rise, or rise then fall… Sometimes, a line on a chart is just a line on a chart. 

There’s ALWAYS a Divergence

“There’s no science behind that, people look at that kind of thing and they point out what they want to see.”

In the above image, you’ll see the photograph that became the cover shot for the Beatle’s final album, Abbey Road. The photo contains one of the most talked about divergences of all time – Paul McCartney being both shoeless and out of step with the rest of the band. This divergence sparked all manner of conspiracy theories as people took observations from the image and ascribed a deeper meaning to them that simply wasn’t there. In one example, fans took the “clue” of Paul’s bare feet and concocted a story whereby he had actually died and the Beatles were telling us that he had, in fact, been replaced with a body double sometime during the 1960′s.

The reality, however, is that this “divergence” carried absolutely zero significance at all.

What actually happened was fairly straightforward: It was August 8th, 1969, and a very hot day. Paul McCartney had been wearing sandals for the shoot, which had taken all of ten minutes with very little planning at all. John Lennon’s friend, freelance photographer Iain Macmillan, got up on a step ladder in the middle of the  intersection outside the Abbey Road recording studio. The Beatles had made a handful of passes across the road. Of the six shots Macmillan had taken, the Beatles chose the fifth one because they appeared to be the most in-step as well as the fact that they were walking away from their studio and – not toward it – after seven long years of being “trapped” there. The fifth shot just happened to feature Paul without his sandals on, he’d taken them off because all the back and forth had been bothering his feet.

Yes, a divergence. But no, there was any meaning behind it.

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