A Quick Intraday Peek Inside the SP500 at the 1300 Level

Jul 18, 2011: 12:43 PM CST

To follow-up with my prior morning post on the “Monday Morning Stock Index Update at Midpoint Value Areas,” I thought it would be helpful to show the current structure of the 1-min chart during lunchtime.

In other words, we’re all watching the “Make or Break” 1,300 region, but what is the market saying?

Let’s take a peek:

We’re seeing the plain SP500 Price Chart with the 3/10 Oscillator and the NYSE TICK (Internal).

What’s the message?

Going down in to the 1,300 level, the key indicators formed lengthy Positive Divergences into the 1,300 pivot (actually on a slight ‘nip’ or potential ‘trap’ under it).

Just now, we received a bullish “Kick-off” Signal in TICK (after the 11:00am signal from momentum).

That’s a good sign if you’re a bull who is expecting a bounce off this level, and a caution sign if you’re a bear who is expecting a big break.

As of lunchtime on Monday, we have NOT received an official breakdown sell signal.  That may change into the close, but for now, the ball is on the bulls’ court and it’s their short-term game to lose.

In other words, if there were new momentum and TICK lows as the market fell intraday to 1,300, we would simply expect a firm breakdown – buyers could not stop the tide of selling.

However, what we’re seeing at this moment (which admittedly may change) is hidden strength from the buyers/bulls and a willingness to defend the 1,300 level at the moment.

Look for further confirmation intraday buy signals on a break of prior swing highs from the morning – 1,302 then 1,304 come to mind.

Otherwise, continue watching your intraday charts to see inside this critical tug-of-war between buyers and sellers at 1,300 and be ready to trade accordingly.

If the bulls give up the advantages here (from the divergences and support), it would likely trigger a feedback loop of selling pressure (bears shorting and bulls selling to stop-losses) on a firm breakdown under 1,300 and “failure test” of 1,300’s critical/obvious market support.

Corey Rosenbloom, CMT
Afraid to Trade.com

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1 Comment

One Response to “A Quick Intraday Peek Inside the SP500 at the 1300 Level”

  1. PropdeskPerspective Says:

    I've always found it interesting when the fundamentals and the technicals work together. I work on a prop desk and blogged today about the shift in market sentiment midday (by watching the treasury markets and the eur/usd — http://t.co/wRcTFwL  ) 11am is also when the Eur/usd starting bouncing higher (risk on) and treasury prices started definitively breaking down at the same time (also risk on). As always, great technical insight!