March 5 Midday Quick Check on Market Internals at the Highs

Mar 5, 2014: 12:32 PM CST

With the S&P 500 at all-time highs, what are internals revealing “behind the scenes” of the market?

Let’s take a quick look at price with internals in motion:

S&P 500 SPX SP500 Market Internals Divergences Highs

For reference, we’re seeing the S&P 500 index with three key Market Internal symbols underneath:

$ADD = Breadth or NYSE Advancing Issues minus Declining Issues (Advancers – Decliners)

$TICK = NYSE TICK or Stocks “ticking” higher at a precise moment minus those “ticking” (trading) down

$VOLD = NYSE Volume Difference of Breadth (Volume of Advancing Issues minus Vol. of Declining Issues)

While similar, these three internals are different and provide additional information to the picture.

While price did trade temporarily at another all-time high this morning, all three key Market Internals were clearly down or lower on the session.

Market Internals diverged – or failed to confirm – the new all-time price high.

While not an immediate reversal signal, it is a non-confirmation that suggests caution over rampant bullishness.

Probabilities for additional upside price action would be higher if internals also registered similar new indicator highs as the price (which would be a sign of confirmation.

We can zoom-in our perspective on the 5-min chart to see the finer details of Internals and Price:

SPX Market Internals S&P 500 SP500 Intraday Internals

If we are to get more technical, we see NYSE TICK registering a new short-term high above +1,180 on the gap-up from Tuesday, March 4th.

By the close of the session (time in PST), while the S&P 500 completed a powerful Trend Day with price closing at the highs, the NYSE TICK high at that moment was near +850.

Similarly, NYSE Breadth peaked just off the market open for a high of the day near 2,300 but declined throughout the session to close near 1,957 – despite price trading up all day.

For today’s snap-shot, TICK spent most of the day under the zero line and Breadth never traded above zero so far in today’s session.

Again, this isn’t a “run for the hills” indication, but it is one of caution as market internals are failing to confirm the exuberance of the all-time price highs.

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Corey Rosenbloom, CMT
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