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As Featured In
Market Internals 2013-10-22
Monthly update on market internals.
The current snapshot of S&P 500 3-Day Advance Issues, Tick16 Short Term + Long Term as of 2013 October 22 close.
Reading
1. Long Term Tick16 (yellow line) bearish
2. Short Term Tick16 (red line) in breakout mode after spending days near Long Term Tick16
3. 3-Day Advance Issues (green line) divergence top against S&P new high
Inference
a. #1 is bearish
b. #2 volatility expansion coming
c. #3 a short term top in the making. If S&P does not pullback significantly while 3-Day Advance Issues going back down to neutral, it will turn into a powerful buy signal.
Review
Inference was correct from last update:
– 3-Day Advance Issues went negative and we got this 3 weeks selloff
– 5% drop with a new high printed right after, "extreme volatility" indeed!
Long Term Outlook
Dow has not make a new high with S&P and Nasdaq on this latest rally. This divergence has happened across the globe. Usually such setup points to the markets having these new highs being wrong.
2 historical scenarios similar to what we have now worth mentioning here. One is year 1929 and the other is year 1998. Both happened on unusual circumstances but having completely opposite outcomes. Check out the charts yourself to see what I mean.
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