SP500 Intraday Market Internals Send Strong Warning Signal Apr 15

Apr 15, 2010: 2:45 PM CST

For those of you who follow key market internals on an intraday basis, you almost certainly noticed that today’s break to new recovery highs in the S&P 500 was not confirmed (really in any way) by any of the three key market internals.

That’s a warning signal but not yet a ‘reversal’ signal unless we see follow-through with lower prices.

Let’s take a quick look at the internals and intraday chart as we wind down into the close on April 15th.


(Click for full-size image)

It looks currently like the market may have formed an intraday “Double Top” in prices, though the spike to new highs (from yesterday’s levels) was met with a severe deterioration in market internals as seen in the Breadth, TICK Extremes, and VOLD (Breadth Volume Divergence).

Thus, internals are sending a strong “warning signal” that would be a sell-signal (or protect capital signal) if we see a break under the trendline or the intraday swing low at 1,208.  Keep in mind that there is confluence resistance (weekly chart) at 1,225 so we could continue our push to there.

While Breadth reached an intraday high yesterday of 1,648, the high in Breadth this morning – while index prices were higher – was 352.

Breadth represents the net difference in Advancing stocks on the day minus Declining stocks on the day (NYSE data).  While the index shot to new highs this morning, fewer stocks were advancing on the session than yesterday… to the tune of almost a 4 to 1 ratio.

I’m not sure that anything can stop this market – not even a decline in internals – so take this as it is and continue watching price in relation to trendlines, as I mentioned in yesterday’s post:

Rising Trendlines – The Only Thing that Matters Anymore?

Corey Rosenbloom, CMT
Afraid to Trade.com

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

7 Comments

7 Responses to “SP500 Intraday Market Internals Send Strong Warning Signal Apr 15”

  1. blues Says:

    Actually I see a pennant forming… so far pennant has worked to bull's favor, either we breakout of pennant and go higher or we break below do a bear trap and then go higher… I have not seen any pennant of late that actually break down for good… although another interesting thing on options side, look like ISEE (all equity) is going to end at record high (since inception I believe) today at 300+ and yesterday was CBOE put/call made record low…

  2. Dan de Man Says:

    Hey Corey! Thx for the article. I just wanted to point out that the VIX was a hairline away from a bullish touch:

    http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=0&

    Cheers,
    Dan

  3. benle Says:

    Excellent observation by Corey – as always. I'm actually looking at the 60-minute chart and I see the same bearish picture. We see the price continues to move higher with massive bearish divergence on every indicators such as MACD. We had the same bearish divergence in early January which resulted in massive selloff. I'm expecting the market to give up all the gains since February very soon. Be prepared for it.

  4. benle Says:

    Excellent observation by Corey – as always. I'm actually looking at the 60-minute chart and I see the same bearish picture. We see the price continues to move higher with massive bearish divergence on every indicators such as MACD. We had the same bearish divergence in early January which resulted in massive selloff. I'm expecting the market to give up all the gains since February very soon. Be prepared for it.

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