Quick Checkup of Monday Market Internals

Feb 28, 2011: 3:06 PM CST

Though the S&P 500 rallied this morning, internals declined which helped fuel a pullback/retracement into a key support level intraday.

Let’s take a quick zoom-in on the Big Three Market Internals and the level to watch for intraday traders:

It is absolutely essential that short-term – especially intraday – traders compare price swings with readings in Market Internals.

Like volume insights, you want to find that Internals go with Price – new price highs with new highs in Internals are confirmations that help us expect additional price highs… while new price highs with a decline/non-confirmation in internals give us cautious signals to be on guard for potential reversals/retracements.

That’s precisely what happened this morning with the push-up to new swing highs above 1,325 that were clearly NOT confirmed with market internals.

As price broke the rising short-term morning trendline at 1,327, a “protect profits” or aggressive sell signal triggered which resulted in a move down to the target intraday support zone of 1,320 as highlighted above.

Buyers need to hold this level and drive prices higher here, else we can expect a deeper pullback to lower support levels including 1,310 and 1,300’s key level.

For now, keep updated on price with market internals at the key intraday pivot 1,320 level.

Corey Rosenbloom, CMT
Afraid to Trade.com

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