Midday Stock Market Internals And Gold Rally

Let’s take a quick noon EST look at the SPY, market internals, and a quick look at gold prices, which is the top story of the day.

SPY 5-min:

The S&P 500 gapped up this morning and has been rallying ever since in what could be yet another “Trend Day” up, but as always we have to keep a close watch on market internals for confirmation.

On suspected trend days, watch closely the 20 period EMA on the 5-min chart for trade set-ups and for confirmation of the trend day bias (expect bounces to occur off the 20 EMA).  Any break of the 20 EMA would set-up a scalp trade to test the rising 50 EMA, which is the “line in the sand” to distinguish expectations for higher prices on developing trend-days.

The TICK has stayed almost constantly above zero all day long, and any negative TICK reading has given a buying opportunity.

In the way of non-confirmations, we’ve seen a negative momentum divergence (not a big deal on trend days) but also a flat-line TICK divergence with price highs - a little concerning and a chink in the armor of the trend day hypothesis.  We’ll need to watch this closely as well.

Market Internals:

As of noon EST, market internals unanimously remain strong, with the Breadth strong (over 2,160 more stocks advancing today than declining - 2,591 to 431 to be exact).  However, the differential ($ADD) has ticked off the intraday high of 2,300 - which is a slight non-confirmation and warns of caution, or at least to expect price to prove itself to expect higher prices.  We see that the declining stocks are ticking up, creating the pullback in the Breadth reading.

Otherwise, the TRIN remains strong - well under 1.0, but also off the lows of the session - we’d expect a TRIN to fall steadily for the session to continue to be bullish.

Finally, clear skies ahead from the Up-Volume vs Down-Volume, with an almost 10 to 1 ratio of Up-Volume action to Down-Volume.

Not the picture of absolute strength, so price has to prove itself and we need to watch this closer than normal.

@YG mini-Gold Prices:

Gold has rallied over $20 or 2% on the falling dollar (which is helping push equities and commodities higher) and inflationary concerns.

Gold seems to be forming a trend day as well, but is also being met with a negative momentum divergence and breaking of the 20 EMA - again, a reason to watch closely to see if bulls can overcome these divergences, or if these will form near intraday highs.

Keep watching the internals and monitoring structure.

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