A Quick Check on May 16 SP500 Breadth Divergences

May 16, 2012: 9:01 AM CST

As we start Wednesday morning with a bullish gap, let’s take a quick step inside the market for a “Breadth Check-up” on the S&P 500.

Here’s the intraday chart structure:

What we’re seeing is the S&P 500 Index on the 5-min frame with two Market Internals that show Breadth:

  • $ADD:  NYSE Breadth (Advancing Issues minus Declining Issues)
  • $VOLD:  Volume Difference of Advancing Issues and Declining Issues

Before we discuss the current structure, let’s review the most recent negative divergence that developed on May 10th into the 1,365 resistance area.

Breadth and VOLD peaked with price on May 10th, yet price pushed the next session back to 1,365 but this time we saw a visual decline – negative divergence – in both Breadth and VOLD.

This mid-morning situation (divergence) was the intraday peak ahead of the current decline to the 1,330 level.

Similarly, Breadth and VOLD pushed to new lows on May 14th (Monday) with price near the 1,340 index level.

Yesterday (May 15th) resulted in a price push UNDER the support level… but both Breadth and VOLD failed to register new internal lows, locking in a Positive Divergence.

Now, Wednesday’s session opens with a bullish gap and initial upward impulse which has resulted in a push-up in Breadth as well.

In sum, Breadth and VOLD – Market Internals – suggests at least initial price strength/bullishness as a result of their positive divergences.

We’ll look to price today and tomorrow for confirmation/follow-through with this potential bullish signal with respect to the key 1,340 index level.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

Comments Off on A Quick Check on May 16 SP500 Breadth Divergences

Comments are closed.