Massive TICK and Breadth Divergence on SPY Intraday

Jun 30, 2009: 12:59 AM CST

I wanted to share with you something I’m paying particular attention to – the TICK, Breadth, 3-Push Momentum Divergence, and Volume Divergence we’re seeing at these intraday levels in the SPY (and other US Market ETFs).  Let’s take a quick look to see what this might mean so that we can be prepared if prices start falling from these levels.

Without going into too much detail, take a look at a full, five-wave Elliott fractal move completing on a “Three Push” Negative Momentum Divergence – that’s often all it takes to trigger a ‘short sell’ trade and play for a possible trend reversal with a stop placed a decent distance above the highs at $93.00 in the SPY.

We’re also seeing a slight volume divergence as price as risen in what appears to be a ‘counter-trend’ move up.

It’s possible that we’re forming the right shoulder on a daily chart Head and Shoulders reversal pattern… but let’s not get too far ahead of ourselves here intraday.

Looking beyond Volume and Momentum, let’s see what the Market Internals of Breadth and the TICK are telling us:

If you look closely at the TICK (middle panel), you’ll see that we peaked on June 25th and have been making lower highs ever since.  We’ve also just made a New TICK Low at -1,000 which is not the direction bulls want the TICK to be making.

What’s even more obvious is a Negative Breadth Divergence that began on June 24th and on each subsequent higher high in price, breadth (Net Advancers minus Net Decliners) has made a lower high, locking in a non-confirmation.

Let’s put it all together:

Complete 5-wave Elliott Fractal Impulse Up
Negative Volume Divergence
Negative TICK Divergence
Negative Breadth Divergence
“Three Push” Triple Negative Momentum Divergence

I would not want to be a bull at these levels and – although there is certainly no guarantee price has to fall from these levels – odds strongly favor downside action yet to come as opposed to higher price action… bulls are going to have to overcome a lot to keep this market rising with these many divergences forming.

Corey’s Note: This analysis is a portion of today’s report of my new subscription service “Idealized Trades Daily Report” (today’s full report is six PDF pages of charts and commentary) which will officially launch July 1st.  I’m allowing blog readers to head over to take a pre-launch sneak peak at the Premium Content/Subscription page and download sample reports and register/subscribe early.

Feel free to submit your email to stay informed and get bonus sample content not posted on the blog..

The subscription links are working, and a subscription also grants you access to archived daily reports dating back to April 2009.

Click on over to read about this new daily service and let me know what you think!  Thank you for all your support.

Corey Rosenbloom, CMT
Afraid to Trade.com

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8 Comments

8 Responses to “Massive TICK and Breadth Divergence on SPY Intraday”

  1. Wall_St_Cheat_Sheet Says:

    Great post, Corey. How do we discount the low volume holiday week? Some of the top fund guys I know are on the beach this week.

    Thanks for the great work!

    Damien

  2. Corey Rosenbloom, CMT Says:

    Good question, Damien.

    Even if you throw out the volume analysis, you're still left with the other non-confirmations.

    Comparing this day with prior dates in the past in terms of volume in SPY:

    June 29, 2009: 168,000,000
    June 30, 2008: 259,000,000
    June 29, 2007: 199,000,000
    June 29, 2006: 110,000,000

    Not a huge sample, but we see that Monday's action was the weakest June 29th action since 2006.

    That makes the volume divergence more valid since the trend has been increasing year-over-year in terms of activity in SPY as a whole.

  3. Wall_St_Cheat_Sheet Says:

    Thanks for the explanation. I would be curious to know which of those June dates fell during the July 4th shortened holiday week, and which happened the previous week.

    Great stuff, Corey. I love your website and what you're doing. Thanks!

  4. fufufnik Says:

    Slow line on the 3/10 oscillator crossed negative (on Daily Chart). First time since March. Stability of trend is weakening.
    http://toddstrade.blogspot.com/2009/06/first-cr

  5. Tom Says:

    Corey,

    How do you set the Spread Diff. indicator in TS? It says Data 2 is missing when I try to insert on SPY chart.

    TIA

  6. Tom Says:

    Corey,

    Are there any instance/s when for example TICK, momentum does not agree with each other? TICK shows divergence while momentum oscillators makes new lows (on a down day). How do you deal with such scenarios if they ever happen?

  7. Tom Says:

    Corey,

    How do you set the Spread Diff. indicator in TS? It says Data 2 is missing when I try to insert on SPY chart.

    TIA

  8. Tom Says:

    Corey,

    Are there any instance/s when for example TICK, momentum does not agree with each other? TICK shows divergence while momentum oscillators makes new lows (on a down day). How do you deal with such scenarios if they ever happen?