Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

A Checkup on SP500 Market Structure and Internals After the Selloff

Wed, Feb 20, 5:22 PM ET, by Corey Rosenbloom

What happened today (February 20th) and what are Internals and Market (Price) Structure suggesting about the present and short-term future of the S&P 500?

Let’s take a quick look at the sharp post-Federal Reserve minutes announcement and make sense of the current environment and key levels to be watching this week.

First, a look at S&P 500 Price Structure (with Momentum):

First, we define Structure as the series of price swing highs and swing lows that comprise a trend (or directional movement).

Structure can also refer to the Volatility environment or character of the price swings themselves (that compromise a trend movement).

Let’s first talk about a definitive change in structure that I highlighted – and we can now see updated – in my prior post “Market Moves from Stability to Instability.

We can see that clearly in the chart above where the market moved from a typical (stable) progression of visual swings in both directions during December and then devolved into instability from January to present.

The instability referred to the “creeper trend” or low-volatility directional movement that DID NOT form visual swings.

We cannot meaningfully assess structure when the market moves in one direction without a corresponding swing (retracement) in the opposite direction – it all counts as a single, extended “swing.”

We can view instability another way by assessing the momentum oscillator (or just the price itself) and referring to the two highlighted periods of visual instability (sharp, seemingly random movement in both directions).

Short-term instability refers to sharp price movement one direction that is immediately reversed in the opposite direction with no movement.

It occurred in early February and now we see a second period of short-term instability this week.

In simplest terms, if you feel uncomfortable with instability or sharp/violent price movement with no clear direction (also known as “chop” or “noise”), use extreme caution (focus on very short-term/intraday trades) until the market can return to a relatively normal or ’stable’ environment of bi-directional swings with visual trend movement.

We can take a look at the current environment and note the key levels while we update the picture on Market Internals:

We can also update my post from last week that highlighted the Triangle you see above in Market Internals.

The main idea is that Market Internals reveal the underlying strength or weakness (a form of confirmation/non-confirmation) with a directional price movement (trend) in motion.

Internals also highlight periods of compression in price as well, as was the case going into this week when Internals formed a visual compression or Symmetrical Triangle pattern.

To highlight the instability of the current market – as if we needed another reminder – internals and price broke above ‘resistance’ yet today’s session (February 20th) reversed both price and internals in a vicious trap situation.

Keep in mind also that while price itself made new recovery highs, neither Breadth nor VOLD (Volume Difference of Breadth) made corresponding new recovery highs above their early February peaks.

This non-confirmation suggested that the upward break was not as strong as otherwise assumed (volume also registered average to below average levels on the breakout).

Now we have the market in a similar “Diamond” or Broadening Formation as we saw at the start of February.

Notice the similar – yet smaller – Broadening Trendlines that then compressed into a type of Diamond formation though price continued its ‘unstable’ creep higher with a breakout on February 8th.

There’s two interesting facts and the first is that both Breadth and VOLD registered new chart lows (Breadth is slightly above the February 4th low).

VOLD clearly made new chart lows not seen since December 21, 2012.

The second fact is that price closed the session AT a key inflection level which is the lower “Broadening” trendline and prior price polarity level into 1,510.

Bearish plays will be favored under 1,510 (targeting 1,500 to 1,490) while bullish ’support bounce’ plays will be favored above it (again, referencing the early February smaller Broadening Trendline pattern.

I update these charts and commentary daily for members of the Idealized Trades and planning reports – these provide consistent themes and analysis each evening.

For now, keep in mind that the market remains in an unstable state and the goal is often to survive these periods with as few losses as possible and be ready to strike again when the market returns to relative stability or at least starts ’swinging’ (moving) meaningfully both in pro-trend and retracement/counter-trend directions.

Stability will return, but these periods of instability often mean we have to work harder and drop our timeframes so that we’re not chopped in both directions with swing trades that would otherwise work well in ‘normal’ periods.

Be safe!

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey's new book The Complete Trading Course (Wiley Finance) is now available!

blog.afraidtotrade.com


SDI Glossary: "Bearish" Definition
SDI Glossary: "price" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "Short" Definition
SDI Glossary: "Trend" Definition
SDI Glossary: "Volume" Definition
This Article's Word Cloud:   Breadth   Broadening   Corey   February   Internals   Market   Structure   VOLD   above   also   both   chart   confirmation   current   direction   directional   directions   early   environment   form   from   highlighted   highs   instability   into   levels   look   lows   made   market   movement   periods   post   price   sharp   short   swing   swings   term   that   these   this   trend   update   visual   week   when   while   will   with

| More

Emini Price Plays Nice within our Fibonacci Retracement Grid Aug 30
Tue, Aug 30, 12:11 PM ET, by Corey Rosenbloom

We’re still within the trading range and price is still reacting to our short-term @ES ...

Financial Stocks Liking the Prospect of Higher Fed Rates XLF FAS
Mon, Aug 29, 3:41 PM ET, by Corey Rosenbloom

The Financial and Bank stocks are loving the prospect of higher rates from the Federal ...

Beginning a Bearish Arc Lower for Tesla TSLA
Mon, Aug 29, 1:41 PM ET, by Corey Rosenbloom

Is Tesla (TSLA) about to fall off the cliff and plunge lower, completing another “Arc” ...

Rush to the Highs Emini Fibonacci Bounce Update Aug 29
Mon, Aug 29, 1:31 PM ET, by Corey Rosenbloom

Back toward the highs we go! It’s almost as if Chair Yellen said nothing that ...

Thanks Yellen Emini Fibonacci Grid Update August 26
Fri, Aug 26, 1:31 PM ET, by Corey Rosenbloom

Well THAT got interesting fast! Chair Yellen strongly hinted that conditions allow for a near-term ...

Gold's Collapse into Key Support Target August 25
Thu, Aug 25, 12:11 PM ET, by Corey Rosenbloom

Gold completed a Triangle and Price Projection Target toward the prior low which sets up ...

Bouncing Market Emini Fibonacci Grid Update August 25
Thu, Aug 25, 11:51 AM ET, by Corey Rosenbloom

After harshly joking about it Tuesday, we actually did get our expected pullback to a ...

Parabolic Arc and Big Rally for Novatel MIFI Analysis
Tue, Aug 23, 1:21 PM ET, by Corey Rosenbloom

Parabolic Arc, textbook Elliott third wave, to-the-penny 50% Fibonacci. These are just some of the ...

Never a Pullback Emini Fibonacci Grid Aug 23
Tue, Aug 23, 1:11 PM ET, by Corey Rosenbloom

Beuller? Beuller? Beuller? Pullback? Pullback? Pullback? Here’s today’s updated Fibonacci and Emini (@ES) trading levels ...

A Play for Whole Foods WFM Off Critical Support
Mon, Aug 22, 4:11 PM ET, by Corey Rosenbloom

Is it time to buy Whole Foods stock (WFM) for a rapid bounce swing trade? ...

Year to Date Sector Rotation Insights August 2016
Mon, Aug 22, 12:21 PM ET, by Corey Rosenbloom

Bull? Bear? Top forming? What’s the message from the Sector Rotation Model at the moment? ...

Range Continues for Emini Fibonacci Intraday Update Aug 22
Mon, Aug 22, 12:11 PM ET, by Corey Rosenbloom

One day we’ll get a breakout from this repeating range in the S&P 500 – ...

August 18 Emini Intraday Trading Levels Update
Thu, Aug 18, 12:21 PM ET, by Corey Rosenbloom

A short-term trading range for the @ES futures – similar to July – is repeating ...

Midday Successful Emini Fibonacci Bounce Update
Wed, Aug 17, 1:51 PM ET, by Corey Rosenbloom

Here’s a quick mid-day update of the point-perfect Fibonacci Retracement Level reversal for the @ES ...

A Perfect Pullback Lesson from Amazon AMZN
Wed, Aug 17, 12:11 PM ET, by Corey Rosenbloom

Amazon.com (AMZN) offers us a great lesson – and current opportunity – to study “Perfect ...

Technology and Utility ETFs Go Their Own Way XLK XLU
Tue, Aug 16, 12:11 PM ET, by Corey Rosenbloom

“You can go your own way!” was famously sung by Fleetwood Mac and for the ...

Small Pullback from the Highs Emini Fibonacci Grid Aug 16
Tue, Aug 16, 11:51 AM ET, by Corey Rosenbloom

Pullback? Updated levels? Uptrend continuing? Let’s take a look at our morning update. Here’s today’s ...

Start Your Monday with Corey and the Timing Research Show
Sat, Aug 13, 9:51 PM ET, by Corey Rosenbloom

I’m excited to announce that I’ll be returning to join a an exciting and informative ...

Gold Gone Wild with High Volatility Reversals
Fri, Aug 12, 3:11 PM ET, by Corey Rosenbloom

Gold (@GC) picked up volatility with large gaps and intraday strong reversals. Let’s pinpoint the ...

US Steel X Falls to Critical Support Pivot Trade
Fri, Aug 12, 12:21 PM ET, by Corey Rosenbloom

US Steel (X) surprised with a steeper retracement than expected, collapsing down from $28 to ...

August 12 Exciting Emini Fibonacci Grid Update
Fri, Aug 12, 12:11 PM ET, by Corey Rosenbloom

We’re seeing additional movement through our key Fibonacci Grid Levels. Here’s today’s updated Fibonacci and ...

NVIDIA NVDA Keeps Impressing with New Uptrend Highs
Thu, Aug 11, 4:11 PM ET, by Corey Rosenbloom

NVIDIA (NVDA) continues its strong bullish uptrend, giving us another example of the superiority of ...

Hey Our Emini Fibonacci Levels are Working August 11
Thu, Aug 11, 1:41 PM ET, by Corey Rosenbloom

If you followed our update from yesterday, you had a perfect plan for profit on ...

Dual Divergent Reversals in Stocks and Crude Oil
Wed, Aug 10, 2:41 PM ET, by Corey Rosenbloom

After holding at the highs, Stocks reversed lower today from their lofty heights. Crude Oil ...

Emini Pullback Planning Fibonacci Grid August 10
Wed, Aug 10, 2:31 PM ET, by Corey Rosenbloom

Here’s our update for today! Price pulled back and broke under our upper Fibonacci Level ...

GoPro GPRO Boldly Breaks Resistance into Bullish Zone
Mon, Aug 8, 1:11 PM ET, by Corey Rosenbloom

We’re seeing GoPro Inc (GPRO) flash on our stock scan this morning as it’s breaking ...

New Emini Fibonacci Retracement Grid August 8
Mon, Aug 8, 12:41 PM ET, by Corey Rosenbloom

Price jumped higher into the 2,180 @ES level this morning and (so far) pulled back ...

Join Corey for a Live Trading Challenge at the San Francisco Money Show August 24
Fri, Aug 5, 1:51 PM ET, by Corey Rosenbloom

I’m so excited about this opportunity! Join me live as I accept a live, real-money ...

Jobs Report Breakout to New Highs Emini Update Aug 5
Fri, Aug 5, 12:51 PM ET, by Corey Rosenbloom

Breakout! Short-Squeeze! Better than Expected Jobs Report! Buyers took control away from the bears today, ...

The Twitter Trap TWTR a Bear Trap Reversal
Thu, Aug 4, 2:21 PM ET, by Corey Rosenbloom

Bear Trap! Twitter shares surprised investors and traders with a strong gap lower in late ...

Flag Bounce Emini Fibonacci Grid Update August 4
Thu, Aug 4, 2:11 PM ET, by Corey Rosenbloom

Our Bounce Continued – price fell toward our initial Fibonacci Target and has now bounced ...

Crude Oil Finally Bounces and May Reverse Short Term Downtrend
Wed, Aug 3, 1:41 PM ET, by Corey Rosenbloom

Is Crude Oil @CL Snapping its Downtrend? After a persistent swing down from $50.00 toward ...

Fibonacci Bounce Emini Update Aug 3
Wed, Aug 3, 12:11 PM ET, by Corey Rosenbloom

Yesterday’s sell-swing took us straight to our Fibonacci Retracement target ahead of a bounce up ...

Back to the 20 Day EMA Target We Go Aug 2
Tue, Aug 2, 11:51 AM ET, by Corey Rosenbloom

In an uptrend price typically swings higher then pulls back toward a rising moving average. ...

Hey The Emini Fibonacci Grid Worked Update August 2
Tue, Aug 2, 11:31 AM ET, by Corey Rosenbloom

While price expanded the lengthy trading range, we saw this morning’s price action pull back ...

The BlackBerry Breakout BBRY August 1
Mon, Aug 1, 2:11 PM ET, by Corey Rosenbloom

BlackBerry shares (BBRY) broke free of daily and weekly resistance, triggering a new bullish phase. ...

Range Range Range Emini Market Update August 1
Mon, Aug 1, 12:31 PM ET, by Corey Rosenbloom

Price was on a volatile arc this morning that keep us within the lengthy trading ...

Quirks and Reversals in the Quad Market Grid Gold Oil Dollar
Fri, Jul 29, 12:31 PM ET, by Corey Rosenbloom

The weaker than expected GDP report this morning spiked volatility higher in our quad-market grid. ...

GDP Surprise Breakout from Emini Range July 29
Fri, Jul 29, 12:21 PM ET, by Corey Rosenbloom

A weaker than expected GDP report this morning was exactly the bullish catalyst needed to ...

The Seriously Strong Uptrend and New All Time High for Facebook FB
Thu, Jul 28, 1:21 PM ET, by Corey Rosenbloom

“Strong stocks tend to get stronger.” Facebook (FB) shares gave us another example of this ...

The Not New Same Emini Fibonacci Levels in the Range Update July 28
Thu, Jul 28, 1:11 PM ET, by Corey Rosenbloom

With the Fed NOT raising rates as expected, price responded with little fanfare – or ...

The Fed Does Nothing but Keep the Current Range Going
Wed, Jul 27, 3:31 PM ET, by Corey Rosenbloom

As widely expected, and with little fanfare, the Fed did absolutely nothing today except keep ...

Fed Day Emini Fibonacci Pullback Grid July 27
Wed, Jul 27, 12:11 PM ET, by Corey Rosenbloom

The Fed won’t raise rates later today at their meeting, and the market could rally ...

Triangle Midday Market Update and Stock Scan July 26
Tue, Jul 26, 4:11 PM ET, by Corey Rosenbloom

Today’s market activity was a volatile, big swing event that resulted in an intraday triangle ...

Down Goes McDonalds MCD July 26
Tue, Jul 26, 10:41 AM ET, by Corey Rosenbloom

McDonald’s (MCD) gives us another example of what can endlessly frustrate new traders. Beating earnings, ...

Same Pullback Same Emini Fibonacci Grid Plan July 25
Mon, Jul 25, 12:21 PM ET, by Corey Rosenbloom

We start the new week with clear echoes to last week. Namely, we’re still trading ...

Down Drips Crude Oil to New Swing Lows July 22
Fri, Jul 22, 2:15 PM ET, by Corey Rosenbloom

In a somewhat surprising outcome, Crude Oil dips to a new swing low at the ...

Yahoo YHOO Surprises with Bullish Breakout into Open Air
Fri, Jul 22, 12:35 PM ET, by Corey Rosenbloom

As the stock market bull continues, we continue to see stocks breakout to new highs. ...

The Raging Bull Continues Emini Grid Update July 22
Fri, Jul 22, 12:15 PM ET, by Corey Rosenbloom

Bear? What Bear? Are there any bears left in the world? Price retraced toward, then ...

Might This Be the Actual Pullback Emini Fibonacci Grid July 21
Thu, Jul 21, 2:15 PM ET, by Corey Rosenbloom

Is this our first actual pullback since the early July breakout?! Here’s today’s updated Fibonacci ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

A Checkup on SP500 Market Structure and Internals After the Selloff | Self Directed Investor | Copyright © 2008 - 2016, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.