Intraday market internals suggest continued consolidation into Monday's session

After a raft of stellar broker earnings, steady interest rate policy, rising crude oil prices, and diplomatic China trade talks this week, today's market action suggests continued consolidation as institutions and individual investors absorb bullish sentiment. Also, continued notions prevail that the market is overbought on a short-term basis but a exodus of participants before the Christmas holiday is generally expected.

Both Advance/Decline and Up/Down volume ratios are holding steady at 1:1 while TRIN is ranging in the .84 area. Intraday breath (top chart, see falling red line) continues lower from yesterday's strong market action as market TICKS (top chart, see bottom panel) has spent most of the time in positive territory. The market has trended quite orderly as market sensitivity has been soothed by alignment between Fed rate expectations and actual economic reports.

One area of concern among insiders is nagging over-bullish sentiment as displayed by lower put/call ratios, a lowering VIX number, and bullish/bearish sentiment extremes as displayed by Investors Intelligence. Lower volatility as expressed by the VIX often correlates with market peaks.




















Longer-term, bullish market action continues to be supported by new highs in stocks (see chart above) and strong market breath. This chart displays the recent peak in new New Highs. However, note the gradual divergences that emerge as market action gently diminishes after new high peaks have been reached.