Thursday, May 12, 2016

Overall Market health check from Market Internals (Thu/12th May)




We check our health by going to doctor. And the doctor sometimes check our internals to see what is going on. Trying to see how our health may turn out in coming days.

Similarly,  some useful information may be gleaned by studying market internals in Superior Profit Way.

Our traders and myself rely more on such analysis than on market chatter from social media or television or print media. Though we don't mind keeping an eye on that to see what others are saying.

What others are saying is however NOT what we want to do. We rely on our own analysis in the end.

Superior Profit Study of Market Internals

Before we actually dive into the studies, it is also to be noted that broad market studies may not change every day. Trying to get insight from it on shorter time frame (Daily or Hourly) may be futile. We therefore use Weekly studies for market internals. As are in the charts above.

What can we gather from this study? That is explained below.

From point 1 (mid/end Oct 2015) to point 2 (mid/end Apr 2016), both NASDAQ (left chart) and NYSE Indices initially fell but then recovered significantly - though not fully reaching the high reached in point 1.

At same time, except one exception, both for NYSE and NASDAQ indices'  internal metrics deteriorated:

52 Week High Low :NASDAQ stayed at same level and NYSE actually improved (this is the only exception where internals stayed same or improved from point 1 to 2).

Advance / Decline: Fell sharply for both NSADAQ and NYSE.

Up-Down Volume: Fell sharply for both NSADAQ and NYSE.

Overall, the internals are showing weakness more than strength.

Though broad indices study does not mean one must only go Long or Short, Superior Profit traders tend to keep this information in his mind when taking trades in individual stocks or other instruments.

Additional food for thought (trading)? Looking at the odd one out above; that "52 Week High" actually stayed same or strengthened a bit from point 1 to 2, one might check out which stocks actually hit 52 Week High around point 2. Is there a stock in that list that you are holding? Thinking of booking profit? Or entering a new position?

Let the CUE Charts help you decide the optimal point for that action ... you may learn more about CUE charts from Education Center. And learn how other traders are using CUE charts from Traders Community.

Sagar
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