SP500 Market Internals Update for April 27: Sell-off Edition

Apr 27, 2010: 11:36 AM CST

Once again, I’m updating a successful turnaround swing in the market that was highlighted in advance by the key Market Internals – as I wrote in yesterday’s update:  “Market Internals Undercut New Highs in S&P 500“.  Read that post for the status of market internals yesterday.

Today, we see the aftermath of the distinct non-confirmation/divergences in internals, showing us another lesson that “Internals DO Actually Matter.”

Here is the current chart of S&P 500 Market Internals:

Yesterday’s high at 1,219 was met with a triple negative divergence in market internals as shown above.  Though we don’t always get an immediate resolution in divergences (price can ignore them), today’s action underscores why it can be helpful at least for intraday and even swing traders to monitor market internals.

We’re now seeing new lows in Breadth, TICK, and VOLD (Difference of Volume in Advancing minus Declining Stocks).

We’re also seeing price at the lower end – actually beneath currently – of the rising trend channel.

As a reference, we just saw a minor positive TICK divergence on the absolute lows of the day, so keep that in mind as a potential bullish sign for the time being – unless price makes a new low to negate it.

TICK responds faster to price moves than Breadth and VOLD by the very nature that it’s quicker to see a stock make an up-tick than for a stock to move from negative to positive on the trading day session (the way the internal stats are created).

Vigilance is the key – along with having quick reflexes and taking a larger picture of what internals are saying.

Corey Rosenbloom, CMT
Afraid to Trade.com

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

Once again, I’m updating a successful turnaround swing in the market that was highlighted in advance by the key Market Internals – as I wrote in yesterday’s update:  “Market Internals Undercut New Highs in S&P 500“.  Read that post for the status of market internals yesterday.

Today, we see the aftermath of the distinct non-confirmation/divergences in internals, showing us another lesson that “Internals DO Actually Matter.”

2 Comments

2 Responses to “SP500 Market Internals Update for April 27: Sell-off Edition”

  1. tomterrific Says:

    Dow hit 61.85 Fib level yesterday. All other indexes have blown by Fib levels. But good old Dow did not. We will not do anything based upon this until we see how it closes but thought that was very interesting. Particularly struck by Barron’s cover this week ( Bear getting run over by a Bus as opposed to the March 09 bottom with a Bull crashing missing a safety net)

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