Market Internals 2011-11-07

Haven’t got time to write an update til now.

The sell off I was looking for til 3-day advance struck bottom was done in the beginning of last week. Not quite what we wanted as you have to be short on the Friday before last week to capture the majority of the move.

Since then the bounce started.

Again the strength of the bounce is way stronger than expected as Tick16 started to improve in both short term and long term.

From this point onward, breadth model enters the buy the dip territory thus all pullback resulting in some kind of oversold conditions are buying opportunity until Tick16 issues another overbought / divergence signal again.

Do not assume it will be a easy – the extreme prints in tick indices is the wildest ones I have seen in years. Meaning that on some trading days, once the tick indices started going in one way, they do not snap out of the swing for hours.

i.e. selloffs with no significant pullback, and supposed pullbacks off higher timeframes turning into full-fledged swings, etc.

For the next few days, it is the dip window so a pullback is expected.

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