Identifying Market Bias using Internals – Trade analysis April 17 2014

When Market is exhibiting buying or selling pressure, convergence in internals is a good indicator of the strength. When index makes a range extension, if TICKS and Spreads also make a range extension, there appears to be strength in the move.

On April 17th 2014, eventhou market opened with a bearish bias ( 3 day HVZ flip ), there was divergence during the initial sell off.  TICKS and S&P Spread did a range extension BUT NQ and NYSE spread did not do the same.  During the next pullback, all 3 indexes along with TICKS and spreads did a range extension. This pointed to potential strength on the BUY side.

SPD did range extension during selloff but others exhibited divergence.

TICKS range extension during sell off and pullback

ES Range extension

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