Market Internals

[Jwhite198621]

Okay, quick question about market internals for the indexes. Is there really any edge on watching market internals? I mean, can't one just learn pure price action and volume analysis? I feel like watching internals along with charts, is almost giving me analysis paralysis. If anyone has experience in this field any advice would be much appreciated.

Thanks in adavance

[jperl]

	Quote:	Jwhite198621
	Okay, quick question about market internals for the indexes. Is there really any edge on watching market internals? I mean, can't one just learn pure price action and volume analysis? I feel like watching internals along with charts, is almost giving me analysis paralysis. If anyone has experience in this field any advice would be much appreciated. Thanks in adavance

Here is my take on market internals JWhite. A number of years ago, I used to plot a chart of the weighted sum of market internals (consisting of the following indices: biotech, software,hardware,financi als,semiconductors, Dow,S&P,Nasdaq,Russell). I was under the impression that if I watched the rest of the market, I could get a jump on whatever else I was trading. Net result was zip. Sometimes the internals would lead, sometimes they would lag, sometimes they would move in the opposite direction. I don't follow market internals any longer, but just use the market statistics of what I'm trading to decide entry and exits.

[Soultrader]

Hi JWhite,

For the US futures, the internals are a handy tool in my opinion. Especially the TICK and TRIN which lets you see shifts in market sentiment throughout the day. I guess it is trader preference, but I had a few strategies based on S&R with internals so it was useful for me.

In the Japanese futures market, there is absolutely no internals so had to build one based on several sectors such as: electric machinery, banks, securities, transports, etc... From my experience, simple tools like the TICK and TRIN win hands down.

It really depends on how you use the internal tools. I dont expect traders to win by trading purely off internals but I think should be used as a way to better understand the strength vs weakness of the current market situation.

Market profile for me better helps me illustrate a potential scenario for todays trading while internals help me time my entries or make instant decisions on whether to enter or not.

[OAC]

Some people trade successfully without looking at volume or internals. Some Woodie people don't even look at prices.
Each to his or her own. But one thing you have to be prepared for is a lot of work no matter what method you use.

[mcichocki_]

ANYTHING with enough followers can yield results.
That being said I gave up on internals and only use volume and price mainly.

The key is to develop a strategy/setup/system that works for you and fit's your mentality and trading style. Back test and forward test before playing it live and be sure the odds are stacked in your favor.

[bh_trade]

I have found that the internals (adv/dec, up/dn volume) generally speaking lag the futures, not lead. However, up/dn volume can be useful. I have found that on the rare strong trend days (like last Wednesday) volume will trend in one direction with barely a hiccup even when/if price pulls back. But on most "normal" days I have found little added value when looking at market internals, almost finding them a potential deterrent to profitable trade setups.

[Jwhite198621]

Nice, thanks for the advice everyone. I have come across tick and price divergence, but most of it was in hindsight. The ticks change so fast sometimes and that causes me to re-think entries, which leaves me with no trades. I have taking a big liking to volume particularly VSA. Anyway, thanks everyone for the help.

[walterw]

	Quote:	mcichocki_
	The key is to develop a strategy/setup/system that works for you and fit's your mentality and trading style. Back test and forward test before playing it live and be sure the odds are stacked in your favor.

Absolutely Mike... overstudyng can be confusing and internals are tricky eventually... one good pattern, good tools to see it, the desire to make $$$ today, some previous practice and you are in bussiness... after that you must reward yourself ¡¡¡ probably the best on the entire ecuation.... cheers Walter.

[waveslider]

One gauge of internals I watch everyday is the Russell futures contract vs S&P futures on a percentage change chart.

When the Russell has relative strength vs. the S&P an up move will persist and a down move will soon reverse.