October 6 Midday Internals and Gold Rally

Oct 6, 2009: 11:31 AM CST

Let’s take a quick noon EST look at the SPY, market internals, and a quick look at gold prices, which is the top story of the day.

SPY 5-min:

The S&P 500 gapped up this morning and has been rallying ever since in what could be yet another “Trend Day” up, but as always we have to keep a close watch on market internals for confirmation.

On suspected trend days, watch closely the 20 period EMA on the 5-min chart for trade set-ups and for confirmation of the trend day bias (expect bounces to occur off the 20 EMA).  Any break of the 20 EMA would set-up a scalp trade to test the rising 50 EMA, which is the “line in the sand” to distinguish expectations for higher prices on developing trend-days.

The TICK has stayed almost constantly above zero all day long, and any negative TICK reading has given a buying opportunity.

In the way of non-confirmations, we’ve seen a negative momentum divergence (not a big deal on trend days) but also a flat-line TICK divergence with price highs – a little concerning and a chink in the armor of the trend day hypothesis.  We’ll need to watch this closely as well.

Market Internals:

As of noon EST, market internals unanimously remain strong, with the Breadth strong (over 2,160 more stocks advancing today than declining – 2,591 to 431 to be exact).  However, the differential ($ADD) has ticked off the intraday high of 2,300 – which is a slight non-confirmation and warns of caution, or at least to expect price to prove itself to expect higher prices.  We see that the declining stocks are ticking up, creating the pullback in the Breadth reading.

Otherwise, the TRIN remains strong – well under 1.0, but also off the lows of the session – we’d expect a TRIN to fall steadily for the session to continue to be bullish.

Finally, clear skies ahead from the Up-Volume vs Down-Volume, with an almost 10 to 1 ratio of Up-Volume action to Down-Volume.

Not the picture of absolute strength, so price has to prove itself and we need to watch this closer than normal.

@YG mini-Gold Prices:

Gold has rallied over $20 or 2% on the falling dollar (which is helping push equities and commodities higher) and inflationary concerns.

Gold seems to be forming a trend day as well, but is also being met with a negative momentum divergence and breaking of the 20 EMA – again, a reason to watch closely to see if bulls can overcome these divergences, or if these will form near intraday highs.

Keep watching the internals and monitoring structure.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

13 Comments

13 Responses to “October 6 Midday Internals and Gold Rally”

  1. Dan de Man Says:

    Great article Corey! Thank you. Negative intra-day momentum is why, as a swing trader, I only trade doubles and sell half when I'm half way to my target. That way, I lock in some gains and let the profits ride until I get a true sell signal.

    Cheers,
    Dan

  2. BuilderBob Says:

    15 minute EMA will soon tell the story for an upmove afternoon (or not)

  3. Corey Rosenbloom, CMT Says:

    Thanks Dan!

    Precisely – it's hard to play for large targets and so much easier to 'scalp' quick moves. Scaling out works as well.

    Keep up the great work!

  4. Corey Rosenbloom, CMT Says:

    Bob,

    Good observation – we broke the 20 EMA on both the 5min and 15-min chart – definitely deterioration in structure and a sign the highs might be in place unless we can strength. Odds up for Rounded Reversal into close.

  5. BuilderBob Says:

    RUT , COMPX , NDX stalled out precisely at multi-day down-trend lines,
    SPX, NYSE smashed thru but have been lagging markets, playing catchup?
    Or, leaders just biding their time before earnings season kicks in?

    Anyway, a little surprised to see 30 Min. EMA's holding markets up.

  6. zuptown Says:

    Corey, I see yo follow TRIN…have you considered the possibility of it now being a somewhat “skewed” indicator as a result of the growing influence of short-side ETF's? If TRIN calculates the up vol. of an inverse ETF would this not distort it? Thnx and great site man.

    charleS

  7. Dan de Man Says:

    Great article Corey! Thank you. Negative intra-day momentum is why, as a swing trader, I only trade doubles and sell half when I'm half way to my target. That way, I lock in some gains and let the profits ride until I get a true sell signal.

    Cheers,
    Dan

  8. BuilderBob Says:

    15 minute EMA will soon tell the story for an upmove afternoon (or not)

  9. Corey Rosenbloom, CMT Says:

    Thanks Dan!

    Precisely – it's hard to play for large targets and so much easier to 'scalp' quick moves. Scaling out works as well.

    Keep up the great work!

  10. Corey Rosenbloom, CMT Says:

    Bob,

    Good observation – we broke the 20 EMA on both the 5min and 15-min chart – definitely deterioration in structure and a sign the highs might be in place unless we can strength. Odds up for Rounded Reversal into close.

  11. BuilderBob Says:

    RUT , COMPX , NDX stalled out precisely at multi-day down-trend lines,
    SPX, NYSE smashed thru but have been lagging markets, playing catchup?
    Or, leaders just biding their time before earnings season kicks in?

    Anyway, a little surprised to see 30 Min. EMA's holding markets up.

  12. October 6 Midday Internals and Gold Rally | Afraid to Trade.com Blog | Write What Says:

    […] original post here:  October 6 Midday Internals and Gold Rally | Afraid to Trade.com Blog Tagged as: breadth, corey, corey-rosenbloom, education, financial, interview, money, new-readers, […]

  13. nobias Says:

    Corey, I see yo follow TRIN…have you considered the possibility of it now being a somewhat “skewed” indicator as a result of the growing influence of short-side ETF's? If TRIN calculates the up vol. of an inverse ETF would this not distort it? Thnx and great site man.

    charleS