Intraday market update

The following is from last night's Daily Wrap. I typically cover market internals toward the end of the Daily Wrap and often we'll have an extreme scenario which gives us pretty good short term foresight and forecasting probabilities, for example from last night....


"Internals are very interesting and also suggest an oversold bounce on a short term (1-day) basis.

There's not a Dominant Price/Volume Relationship in the Dow, it's split so we'll pass, but in the Russell 2000, SPX and NDX, there is with 1084 stocks, 325 stocks and 69 stocks respectively, this is a VERY strong Dominant Price/Volume Relationship and guess what it is...?

Price Down/Volume up, which is essentially like seeing a Hammer candlestick on a daily chart on 3x average volume, it's a 1-day short term deeply oversold condition that suggests the next day close green, similar to last night's which was on track until the F_O_M_C.

Additionally making it even stronger, of the 9 S&P sectors, all 9 closed red, that's Dominant. Tech which was just the laggard a day or so ago led at -.17% and Energy which was the leader just a day or so ago was the laggard at a deep -3.94%, I think the only reason it led a day or so ago was the short squeeze which was primarily in Energy names.

Making the relationship even more potent is the 238 Morningstar Industry and sub-industry groups, only 15 of 238 closed green!!!! AGAIN, A HUGE OVERSOLD SIGNAL, SO I EXPECT THERE TO BE SOME BOUNCE TOMORROW PERHAPS AFTER SOME EARLY MORNING WEAKNESS, MAYBE WE CAN FIND SOME INTERESTING OPPORTUNITIES TO TAKE ADVANTAGE OF THIS SIGNAL THAT'S STANDING OUT."

The "Early morning weakness" was bases on the 3C charts at the close and the concept of 3C picking up where it left off the next trading day (cash market), which suggested early morning weakness which is what we've seen.

However, being internals suggest some strength to build in after the morning session, it would be reasonable to expect it after the European close which is often an area of intraday trend change.

Here's what I've dug up thus far suggesting the market is working on that oversold bounce intraday. First the averages...

 DIA intraday 1 min positive building...

SPY intraday 1 min, not quite positive, but an improvement.

The same with the QQQ 1 min

And a relative positive in the IWM 1 min

As for the Index futures, they show a little more clearly the signals.

 ES 1 min

NQ 1 min

TF 1 min- all intraday positive and continue working on the divergence.

The custom SPX:RUT Ration is also showing a positive divergence.

As is HYG vs SPX.

And TLT vs SPX as it is weaker than it should be (SPX prices inverted), this means yields are leading the SPX.

And Pro sentiment intraday is positive vs the SPX today.

As suggested because of weaker treasuries this morning, yields are leading which helps the market in case of the expected bounce.

You can keep an eye on the NYSE TICK (intraday) as well for some early warning signals, but other than day trading , I don't see this as any big opportunity right now, in fact it gives me some time to look at some more important components of the market.