Market Internals 2013-04-19

By Lawrence

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 April 19 close.

Market Breadth April 19, 2013 DaytradingBias.com

 

Reading

1. Long Term Tick16 (yellow line) below neutral zone.

2. Short Term Tick16 (red line) moved into oversold zone.

3. 3 Days Advance Issues (green line) diverged from new low printed by S&P

 

Inference

a. #1 is bearish pointing to trend sell mode

b. #2 points to a bounce is due until the line is back to neutral zone

c. #3 strong new momentum low points to start of down trend, or as a minimum end of the current up trend. The divergence points to a potential short term bottom in the making.

 

Last update predicted a swing long was coming. I did not expect that turning into a major short squeeze / blow-off top off the double bottom in the 3-day advance issues.

The current selloff in progress now is different from the previous one as the strong new momentum low in 3-day advance issues usually points to significant down side risk. Thus counter-trend long should be taken with precaution that they may fail easily.

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