Market Internals 2013-03-19
By LawrenceMy monthly update on market internals.
The current snapshot of S&P 500 3-Day Advance Issues, Tick16 Short Term + Long Term as of 2013 March 19 close.
Reading
1. Long Term Tick16 (yellow line) below neutral zone but not dropping
2. Short Term Tick16 (red line) moved above the neutral zone
3. 3 Days Advance Issues (green line) diverging from new high printed by S&P
Inference
a. #1 is bearish pointing to overbough and oversold on 30-min chart and higher timeframe can easily result in reversal.
b. #2 points to buying in underlying components near the all time high pretty much continuously.
c. #3 points to a pullback in advance issues back down to oversold zone may be necessary to correct the prolonged period of divergence we experienced over the past month. As long as price can hold a higher low when the advance issue reading is oversold again like end of February, we will get a tradable swing long coming.
Last update predicted we would experience a significant pullback and we got that in late February.
A selloff is now in progress and how it develops from here will determine if the long term price up trend is over or that another leg up is in store for us. Monitor the way how 3 days advance issues is moving will give us the clues.
2nd flush in 3-day advance issues and ES is not even close to going lower.
If ES refuses to play catch up to the breadth, we are looking for ES to go higher again soon.
Critical week.