Midday Check of Market Internals Sept 24

Sep 24, 2009: 11:24 AM CST

Let’s take a quick mid-day check on the market and market internals on what’s shaping up to be a trend day down.

Today so far has shaped up to be a trend day.  To keep that bias going, we’re going to have to see new TICK lows on any new price swing to new intraday lows, and we’re going to have to see the SPY hold under its 20 period EMA on the 5-min chart.

Generally, pullbacks to the 20 EMA provide good shorting opportunities on trend days, provided the prior price low was confirmed with a new TICK or Momentum low (TICK is more important than oscillators on suspected Trend Days).

To confirm what we’re seeing, let’s check the Internals:

The TRIN has remained above 1.0 for almost the whole day, with a strange blip under the 1.0 area from 11:00 to 11:30 EST.  A TRIN above 1.0 is bearish and signals that volume is flowing into declining stocks.

Under that chart is the Up Volume and Down Volume, and we see the Down Volume (red) is over four times the Up Volume (green).  For the trend day to continue, this ratio needs to be maintained or increased.

To the right we have Breadth or Advancers (green) vs Decliners (Red) and note that there are currently 2,332 stocks DOWN on the day vs only 660 that are UP which gives a differential (symbol $ADD) of 1,672.  This ratio also needs to be maintained.  A rise in the $ADD indicator (signaling contracting breadth) would serve as a non-confirmation for the Trend Day thesis.  A declining $ADD (widening negative breadth) would signal confirmation/continuation.

Finally, we see the nine major Sector SPDRS arranged according to the Sector Rotation Model of “Offensive” sectors at the top (with Energy splitting the middle) and the three Defensive Sectors (Staples, Health Care, and Utilities) at the bottom three.  This gives us a gauge on sector performance and risk appetite.

It’s bearish of course – money is flowing out of offensive sectors like Materials (XLB – down 2.25%), Industrials (XLI – down 1.71%), Financials (XLF – down 1.20%) etc.  Energy (XLE) is off 1.76% today which reflects a drop in crude oil prices which are down $2.50 or about 3.70% on the day.

The “Defensive” sectors are holding their own (relative strength) with Utilities slightly positive.

Trend Days are not ‘automatic,’ so keep a check on market internals and the relation of price to both the 20 and 50 period EMA on the 5-min chart.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

8 Comments

8 Responses to “Midday Check of Market Internals Sept 24”

  1. BuilderBob Says:

    The spikes in $Trin as seen on Tradestation seem to be associated with high volume, low priced bank shares i.e. (Citi, Bac, etc.) going in and out of positive territory.

  2. Corey Rosenbloom, CMT Says:

    I've always wondered that. Is that just a TradeStation thing or an exchange transmitted/across the board occurrence?

  3. BuilderBob Says:

    I'm not sure, but I would guess if the data is unfiltered from the exchange, then it should be accurate, you will notice a smoother Trin when all these Hi Vol. banks and ETF's are running similar intraday trends.

  4. BalaB Says:

    hmmmm…$USD keeps pushing up but the Major Indexes nor Core Sectors are breaking through lows (or at least convincingly)…vol. is low aside from the most recent attempt down

  5. BuilderBob Says:

    The spikes in $Trin as seen on Tradestation seem to be associated with high volume, low priced bank shares i.e. (Citi, Bac, etc.) going in and out of positive territory.

  6. Corey Rosenbloom, CMT Says:

    I've always wondered that. Is that just a TradeStation thing or an exchange transmitted/across the board occurrence?

  7. BuilderBob Says:

    I'm not sure, but I would guess if the data is unfiltered from the exchange, then it should be accurate, you will notice a smoother Trin when all these Hi Vol. banks and ETF's are running similar intraday trends.

  8. BalaB Says:

    hmmmm…$USD keeps pushing up but the Major Indexes nor Core Sectors are breaking through lows (or at least convincingly)…vol. is low aside from the most recent attempt down.

    Edit: Further review, looks like a few core sectors may be at support