Update on the Market Internals on SP500 Breakout

Jul 26, 2010: 9:57 AM CST

Are market internals confirming the recent breakout above 1,100 in the S&P 500?

Let’s take a look:

This morning’s update (July 26) shows the three key market internals – Breadth, TICK, and VOLD (Volume Difference of Breadth).

What’s the message?

We’re seeing a slow creep higher in price beyond the 1,100 “round number” resistance level and a push up to the confluence resistance at the 1,110 level – this morning’s intraday high so far.

Breadth and VOLD are registering lower highs than of the intraday burst higher on July 21, which did NOT breakout above 1,100.

With the exception of a TICK spike on the 23rd, TICK is also registering lower highs (extremes) than the past few days, and clearly down from its TICK high peak on July 20.

This is not the picture a rampant bull wants to see on a market breaking out from key resistance at 1,100.

I’ll let market internals speak for themselves, and at the moment, it would be better for bulls to see a pick-up in market internals on such an important ‘breakout’ from daily chart resistance.

We’ve seen in the past that markets can overextend on negative internal divergences, but the resolution or ‘snap-back’ retracements can be harsh… like walking on thin ice.

Continue watching price and look for any sign of strength (a burst higher) in market internals – and unless we see that soon, be very cautious on the long side (trail stops closer, watch for any trendline breaks, etc).

Corey Rosenbloom, CMT
Afraid to Trade.com

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


3 Responses to “Update on the Market Internals on SP500 Breakout”

  1. terlyn Says:

    Image is not linked on my computer.

  2. terlyn Says:

    OK now, thanks.

  3. Corey Rosenbloom, CMT Says:

    Sometimes Flickr has trouble with images when they're first uploaded. It should be ok now – is it?

    Thanks for letting me know!