I wanted to share with you something I’m paying particular attention to - the TICK, Breadth, 3-Push Momentum Divergence, and Volume Divergence we’re seeing at these intraday levels in the SPY (and other US Market ETFs). Let’s take a quick look to see what this might mean so that we can be prepared if prices start falling from these levels.
Without going into too much detail, take a look at a full, five-wave Elliott fractal move completing on a “Three Push” Negative Momentum Divergence - that’s often all it takes to trigger a ’short sell’ trade and play for a possible trend reversal with a stop placed a decent distance above the highs at $93.00 in the SPY.
We’re also seeing a slight volume divergence as price as risen in what appears to be a ‘counter-trend’ move up.
It’s possible that we’re forming the right shoulder on a daily chart Head and Shoulders reversal pattern… but let’s not get too far ahead of ourselves here intraday.
Looking beyond Volume and Momentum, let’s see what the Market Internals of Breadth and the TICK are telling us:
If you look closely at the TICK (middle panel), you’ll see that we peaked on June 25th and have been making lower highs ever since. We’ve also just made a New TICK Low at -1,000 which is not the direction bulls want the TICK to be making.
What’s even more obvious is a Negative Breadth Divergence that began on June 24th and on each subsequent higher high in price, breadth (Net Advancers minus Net Decliners) has made a lower high, locking in a non-confirmation.
Let’s put it all together:
Complete 5-wave Elliott Fractal Impulse Up
Negative Volume Divergence
Negative TICK Divergence
Negative Breadth Divergence
“Three Push” Triple Negative Momentum Divergence
I would not want to be a bull at these levels and - although there is certainly no guarantee price has to fall from these levels - odds strongly favor downside action yet to come as opposed to higher price action… bulls are going to have to overcome a lot to keep this market rising with these many divergences forming.
