A January 4th Midday Check on Market Internals

Jan 4, 2010: 12:32 PM CST

With the market surging to new highs on the wings of a better than expected ISM report this morning (reported 55.9 was above consensus of 54.8), let’s take a look at the current SPY/S&P 500 intraday chart with a quick check on key market internals such as the TICK and Breadth.

I’m showing the SPY (S&P 500 ETF) on the 1-min frame with the 20 and 50 period exponential moving averages.

Under that, I am showing classic Breadth ($ADD in TradeStation) which is the difference between NYSE Advancing and Declining stocks.

Breadth often very closely mirrors the index price action, so it is important to pay close attention to any diverences (such as when the breadth line declines or fails to make new highs while price is making new intraday highs).

I am using a green-dot “show-me” to highlight new Breadth highs to make it easy to compare Breadth Highs with SPY price highs.  All seems relatively well so far with Breadth and Price.

The NYSE TICK (bottom panel) is showing a dramatically different story, however, and intraday traders need to monitor this situation closely for any sign of potential downside price action.  Otherwise, traders need to continue watching the TICK for signs of new TICK highs accompanying new price highs.

As of 12:30 EST (this chart above is in CST), the TICK high on the session was 1,103, made at 10:30 EST.  The TICK has made lower highs ever since… though it has not (really) popped under the zero level, which confirms a Trend Day.

Generally, TICK readings that drop under zero and then turn back positive on a trend day are buying opportunities in price (at least for scalp trades).

Continue monitoring not only price, but its relation to key market internals as the day plays out for the remainder of the session.

Corey Rosenbloom
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

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