An Intraday Internals View on the 1,150 Level in the SP500

I’ve been discussing the importance of the 1,150 level in the S&P 500 as a key boundary between bull and bear, but now let’s step inside the charts and inside the market to look at a few key market internal indicators as we again challenge that level today.

(Click for full-size image)

What I’m showing is the pure price action (with 20 and 50 period EMA) on the 15-min chart.

The indicators are as follows:

First Panel:   The 3/10 Oscillator
Second Panel:  NYSE TICK
Third Panel:  NYSE Breadth (Advancers minus Decliners)

In the chart above, I’m highlighting oscillator and internal divergences with price, which have been quite helpful in anticipating market turns in both directions.

We’re seeing a slight oscillator and TICK divergence as we plow into this level yet again on Tuesday afternoon, which is not what bulls want to be seeing.

We see that the 1,150 level is important resistance, as described in the following prior updates:

“Why the 1,150 Level is Important Resistance”

“SP500 Breaks Rising Intraday Power Trend” (then regains it!)

“SP500 Hits Monthly Resistance… but Will it Hold?”

A break above 1,150 would be very significant and would likely lead to a quick short-term ‘pop’ to the upside due to the ‘pocket’ of stop-losses from the short sellers (which would be defined as a short-squeeze).  Be ready for this potential outcome.

Otherwise, if resistance holds, then look again to lower support levels as we continue in this short-term trading range between 1,132 and 1,150 at new recovery highs.

While potentially very profitable for intraday traders, this has been an absolutely frustrating last few weeks for most swing traders who are getting chopped in both directions.

Keep a watch on internals, as we would want to see new highs in market internals to increase the odds for a breakout above the 1,150 level.

Traders of all timeframes are watching this development very closely for any sign of continuing strength or emerging weakness – stay on guard for any resolution here.

Corey Rosenbloom, CMT
Afraid to Trade.com

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