Reading Market Internals is essential for intraday traders and also is helpful for swing traders, if you compare days to days and swing highs to corresponding internal highs.

Let’s get an update for April 21 and then also note the three recent clean divergences – all of which have produced a turn in the market place.

Will the current divergence do the same?

For a running dialog (to see how the analysis played out in real-time), and more information on the three Internals (Breadth, TICK Extremes, and Volume Difference), see the prior updates related to the chart above:

April 15:  Market Internals Send Strong Warning Signal

April 16:  Strangely Enough, Market Internals DO Matter

April 20: Mid-Day Check on Bullish Market Internals

I’ll let the chart speak for itself.

As we scurried to a new index high (above yesterday, that is), breaking above $121.00, NONE of the three-key market internals were confirming the swing high.

In fact, ALL were diverging, sending their own warning signal to be cautious and watch for any potential trendline or moving average breaks as sell-signals.

It looks like we’re seeing the sell-off now that the divergence forecast right off the open.

Take time to study these charts and how incorporating market internals into you trading can clue you in to potential intraday (and even multi-day) reversals.

Corey Rosenbloom, CMT
Afraid to Trade.com

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