A Midday Check of Market Internals and Structure Sep 11

Sep 11, 2009: 12:38 PM CST

Let’s take a quick mid-afternoon look at the current market using the SPY (S&P 500) as our proxy – noting the chart structure and internals as captured at 1:30 EST on September 11th.

First, the current SPY:

A quick look shows us price gapped up this morning into resistance, faltered, retraced to fill the gap, formed negative momentum and TICK divergences on the high, and now we’re seeing the “working off” or downward move that followed these non-confirmations with price.

Currently, price on the 5-min frame is in a confirmed ‘downtrend’ as evidenced by price being under the 20 and 50 EMAs (and those being in a bearish position) as well as the ‘structure’ showing lower price lows and lower price highs.

It would be bullish if we crossed upwards above the confluence EMAs, but until then, odds seem to favor testing lower prices.  We just made two fresh new TICK and Momentum lows on the session, and if those insights indicate anything about the future, the signal odds favor actual price lows could be ahead.

Watch for support at $104.30 on any down-move and see how price trades should it get down to that area.  Also watch for resistance to be broken at $104.70.  A break of either of these levels could lead to a continuation move.

Next a snapshot of the “Market Internals”

Starting at the top Left, the TRIN (asking whether volume is flowing into ‘advancers’ or ‘decliners’) shows a ratio above 1.0, which suggests that volume is flowing into declining stocks on the day.

To the right of the TRIN, we see that “Declining Stocks” (red) have overtaken “Advancing Stocks” (green) and that the differential – blue “$ADD” chart underneath – was almost -200 at the time of this screen capture.

To the left of the $ADD, we see that Down-Volume ($DVOL) is overtaking Up-Volume ($UVOL) by about 70,000.

These “internals” above indicate bearish confirmation, though not in the nature of a trend day down – more like a “Rounded Reversal” or choppy day as you see the lines crossing mid-day with the upper price reversal.

Finally, we see the “Sector SPDRs” to the right, showing that the worst performers – as of 1:30 – are the Financials and Retail/Discretionary (not what a bull wants to see).

The best performers are the Industrials and then Energy.  Weakness – red – is concentrated at the top of the chart, which indicates money is flowing out of the “Offensive” or “Aggressive” sectors (again, Retail, Financial, Technology).

The Defensive Sectors (Health Care, Utilities and Staples are holding their own – though Health Care is so far down on the day.

Compare performance of each Sector in relative terms to the “SPY” or the S&P 500 ETF.

Market Internals – and price trends – can change quickly, and this is only ONE snapshot mid-day in time so keep an eye on these for signs of internal strength or growing weakness as the day winds to a close.

See my prior “September 9th” post on Market Internals for further descriptions of the above indicators.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

5 Comments

5 Responses to “A Midday Check of Market Internals and Structure Sep 11”

  1. BalaB Says:

    An especially timely update. I was seeing exact same. However, it appears playing for a retest of the lows might be the “obvious” trade (especially considering most recent trade action).

    15min. time frame appears to be at support, throwing a possible monkey wrench in further downside. (Not to mention Cross Current Internals between the Major indices)

  2. Corey Rosenbloom, CMT Says:

    Very true!

    That's why I'm often inclined against posting real-time updates like this – we have to be watching internals and price all day, and taking a quick snapshot is very helpful at the time, but could be very outdated one or two hours later, so these type of posts are helpful only to those who see the post in time and second only if the insights from reading internals stay the same, which we know would be too easy!

    We did fall to $103.40 soon after this post was written as the internals hinted, but we reversed just shy of testing the $103.30 level and now we're above the EMAs.

    I don't have time to post hourly updates which would be necessary to keep up with the constant flow of information – my goal is to teach how to read and follow market internals to readers so they can keep up in real time.

    I'm open to reader feedback as to whether these type of mid-day posts are helpful or not!

  3. BalaB Says:

    I think they're helpful. I've actually been searching for like minded / similar method traders to synergize with throughout the day (as you already know).

    http://docs.google.com/View?id=dfjr22bn_128fmbj

  4. Dominick Says:

    Impressive as always Corey. Enjoy the weekend.

  5. Dominick Says:

    Impressive as always Corey. Enjoy the weekend.