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Yet Another Sleepy Divergence Forms in NYSE Market Internals

I’m never one to pass up mentioning a key negative divergence in price and market internals, and we had another one set-in on today’s market action. Divergences aren’t perfect, so let’s look at the structure of the most recent development, this time using the NYSE Index itself to compare to its internals

Russell 2000 Makes New Recovery Highs but Must Break Weekly Resistance

In an interesting turn of events, the Russell 2000 “Small Cap” Index broke to new recovery highs last week in a sign of bullish strength, but now faces headwinds from the weekly 200 period moving average. Let’s take a quick look at both the daily and weekly Russell 2000 chart to see what level we should watch for important clues as to the strength - or pause - in the recent strong rally. Russell 2000 Daily: In the daily chart, we see one of the most powerful sustained rallies on the Russell 2000, which gave us 16 “up” days and 3 “down” days since the early February low of 580.  The first rally witnessed roughly nine consecutive days of gains

GOOG Shows the Importance of Watching Prior Price Lows

I wanted to follow-up and highlight an interesting point in the recent price rally in Google (GOOG) - specifically with regard to the price bounce off the key ‘last-support’ level I previously mentioned. It’s an interesting lesson that’s worth repeating - here’s the chart: I had mentioned previously that the $520 level was the confirmation point in the otherwise ominous signs, including a bear flag short-sell entry (red arrow at $545)

Is the SPY Repeating the Exact Same Pattern from Yesterday?

That’s a question I’ve been highlighting frequently, with the type of day structure repeating, almost forming a script. What’s interesting is that - as of 1:00 EST - I can highlight the direct comparisons so far in today’s trading that are identical in everything but price to yesterday’s morning action.

The Rising Trendline Channel to Watch in Crude Oil

I couldn’t pass up posting on the almost perfect short-term rising parallel trendline channel that has formed on the intraday chart of Crude Oil futures. It allows us to observe a key channeling formation and learn an important lesson - that divergences can persist and give false signals while price remains in a powerful trend, and that it is more important to watch what price is doing in order to generate trading signals - an important lesson on all timeframes. Let’s take a look: Using TradeStation, we see the pure price of @CL Crude Oil (continuous) futures on the 5-min chart.

SP500 Breakout: Popped Stops or Something Else

It’s common to ask the question when price breaks a key resistance level, “Is this a real breakout that will last, or is this just a short-squeeze situation that won’t?” That’s the operative question now - let’s take a look at the price breakout in the S&P 500 and try to make a determination with the information we have so far. The 1,111 area was key resistance (a key inflection point), being the 61.8% Retracement, a descending trendline, and prior price resistance (late February high of 1,111).

A MidDay Check on Divergent Market Internals SPY March 1

Let’s take an afternoon look at the ‘popped stops’ rally of March 1st, which shows divergences in Breadth and TICK - both important non-confirmations going forward. SPY 5-min Mar 1: First, let me state that divergences in internals do not guarantee reversals, but they signal non-confirmations of price highs which serve as ‘caution lights’ or warning signals to take bullish profits and be on the alert for any weakness. That being said, we’re looking at the SPY (could be the SP 500 Index or @ES Futures - the picture would be identical) on the intraday frame.

Dual Intraday Divergences and the Reversals that Follow Feb 26

Following up from my previous webinar on trading intraday ‘dual’ divergences (TICK and Momentum), I wanted to show the most recent example in the SPY intraday with regards to the negative divergences that resolved in a downward swipe today, which serves as an excellent example of the concept. This is the SPY 3-min chart (compromise to make the candle bars look cleaner) showing the 3/10 Oscillator and the NYSE TICK

Busted Head and Shoulders and Levels to Watch on Japanese Yen

Even if you don’t trade or look at the Japanese Yen Index charts, the Yen Index formed an interested “busted” (so far) head and shoulders pattern on its daily chart that is worth an educational look. Beyond that, let’s look at the key levels to watch for an upside or downside break of current trendline boundaries. Starting with the October 2009 highs, we see a likely “Left Shoulder” forming at the 113 level which then led to a bounce off the 109 support into the “Head” at 116.

Market Follows Script Again with Failure to Fall and Popped Stops

I’ve been asking the question, rhetorically, “ How many times will the market repeat the same pattern ,” (see prior post for previous examples) and the answer is “at least one more time… today.” What pattern is that?  And how can knowing the pattern help your trading?  Let’s take a look. I described the pattern previously as: Morning Weakness Morning Rally into 20/50 EMA confluence Break Through EMA confluence SHARP rally higher into new highs of session 5-wave Fractal into Negative TICK/Momentum Divergences Sell-off/weakness into close The only difference today was that - though we did see negative divergences - price rallied into the close. Everything else was following the script of the prior pattern