A Little Caution Signal from Current Market Internals
Thu, Sep 2, 11:31 AM ET, by Corey Rosenbloom
What are market internals saying about the recent rally? They strengthened with a positive divergence ahead of this week’s rally but now…. Let’s take a quick look at S&P 500 Market Internals as they stand now: 
First, let’s start with the positive divergence signal sent on August 31st from Market Internals. As I show frequently, positive divergences in market internals often forecast – or at least hint – positive reversals in price that NEED to be confirmed with trendline breakouts for trading signals (taking off short-positions and putting on new longs). That’s exactly what happened as the market fell again to the 1,040 level on the morning of August 31st – all three key market internals were HIGHER as price pushed to the swing low. That’s a bullish hidden caution signal and we got the trigger and follow-through the next day (with the big gap and rally). Now that we have the rally, market internals are declining. That’s exactly what you would expect and it’s a normal progression – it would be almost impossible to sustain the high levels of bullish internals domination seen yesterday. So, even though price is higher this morning, internals are declining. That’s a non-confirmation, but it’s not yet a “rush to the exits and panic” signal. Look for trendline breaks or other price-based sell signals for confirmation. Remember, tomorrow’s Jobs Report could be a major market-moving event, but as it stands at the moment, internals are declining (or lower than they were yesterday across the board) as price is rising so that’s certainly a present caution signal. Corey Rosenbloom, CMT
Afraid to Trade.com Follow Corey on Twitter: http://twitter.com/afraidtotrade
 blog.afraidtotrade.com
SDI Glossary: "price" Definition
SDI Glossary: "TA" Definition
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