Market Internals 2013-01-18

My monthly update on market internals.

The current snapshot of S&P 500 3-Day Advance Issues, Tick16 Short Term + Long Term as of 2013 Jan 18 close.

Reading

1. Long Term Tick16 (yellow line) touch down at neutral zone and bounced off

2. Short Term Tick16 (red line) pulled back to neutral zone

3. 3 Days Advance Issues (green line) diverging from new high printed by S&P itself

Inference

a. #1 still in trend buy mode. That means selloffs continue to be buying opportunities. It is diverging significantly relative to the rise in S&P implying a long term top in the making.

b. #2 points to a bottom in the making. Since price never pulled back, it can either be a parabolic breakout to the upside, or, if price suddenly breaking lower, look for oversold setup for the swing long entry.

c. #3 points to a pullback in the making

Last update predicted both the pullback and the swing low is a dip to buy correctly

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