A Message from Market Internals at the Nov 3 High

Nov 4, 2014: 11:28 AM CST

While price screams “higher, higher!” Market Internals yell “Caution!  Look out below!”

Let’s see who’s winning the battle of Price vs. Internals as the S&P 500 crept to a recent all-time high.

I highlighted three events where Market Internals aligned with – or confirmed – the upward price action.

When Market Internals make new highs along with price, it suggests ongoing strength and that the trend will likely continue higher (thus look to buy retracements or breakouts as price trades higher to continue the trend).

However, divergences – or lower highs in Internals while price is making a higher high – are caution signs that suggest ceasing buying pullbacks and shifting to a more defensive posture ahead of a retracement (or short-term reversal).

That’s what is happening now as price pushed to a new all-time high yesterday on weaker internals (particularly Breadth and TICK highs).

Today’s session – at least so far – is a retracement lower as expected.

Here’s a zoomed-in perspective of the 15-min intraday chart:

We see the same picture only slightly clearer with respect to the divergences with price and internals.

Again, be cautious and continue to monitor internals with price action.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

2 Comments

2 Responses to “A Message from Market Internals at the Nov 3 High”

  1. Nov 4 Retracement Market Update and Trending Stock Scan | Afraid to Trade.com Blog Says:

    […] Note the earlier morning update on “The Message from Market Internals” that helped forecast this pullback. […]

  2. Market Retracement and Trending Stock Scan: November 4 By Afraid To Trade - Chartanalyst.expert Says:

    […] the earlier morning update on “The Message from Market Internals” that helped forecast this pullback.Unlike yesterday, stocks took a pause and retraced lower during today’s […]