Over the past few weeks i have been employing internals as a way to edge out information on consolidations, trends, reversals and confirmation of entry. I tested a few indexes and stocks and found the following to be the most useful, after all we are trying to simplify the trading process and too much noise (meaning charts and information) can be a huge distraction especially if your charting NEW issues.
The order of relevance may change but so far this is the priority list of Internals that have worked quite well:
$INDU - this is the Dow Industrial Index and seems to lead or slightly lag the ES & SPX, it is usually closer to the SPX which seems to be slightly ahead of the ES.
$SPX.X - This is the cash version of the S&P futures and can actually be traded, it can likened to a stock index.
$TICK - This is the NYSE measure of Up and Down tick difference of the total stocks that make up the S&P.
I have spoken of this Indie and some of the patterns over the past few weeks. Basically it can provide a snap shot analysis of all the stock traded in the S&P and provide a very short term bias.
$VOLD - This is the total Volume Difference of all the Stocks on the S&P.
$VIX.X - This has been tallied as a Fear index as it is suppose to show the number of "in the money"calls to puts for the current contract month.
STOCK LEADERS:
Exxon - leading Energy oil company
Chevron - Leading Energy Oil company
GE - Leading industrial stock
QQQ - Nasdaq 100 Exchange traded fund
Now to simply to viewing of this information i have 2 methods.
#1 being 4 charts of the $ index's in 1 workspace and the other small stock charts in their own workspace. The charts are used to provide alert information on the fly. I do peak at the $ indies when time permits but the main use is real time alerting updates.
WARNING, processing too much data while trading can be a distraction. I practiced switching as needed until it found myself eliminated the lesser used charts and only toggle during downtime.
The 2nd and primary method is the Radar Screen, where i list my indexes along with the New Intra-day Hi/Lo and ROC indie for quick glance update without toggling charts..
Once I got used to processing this information and disseminating the importance of each index and indie. It all becomes seamless.
I still focus mainly on the ticks and lower time but can pick up quick clues from the Radar screen without losing patterns. And when time permits i can peek at the workspace for visual cues.
Another good clue that price may be reversing on a short term basis is when 2 opposing Radar indies appear. What I look for is the New intra-day Hi/Lo to appear and the ROC to be in opposition.
Here we see the VOLD and the SPX.X make New intra-day Highs (Alert of indie last for 5 minutes) and within this time the ROC goes Negative for both internals. This may be a goo sign that the New high may be topping out.
These are my basic internals and charts. I don't think my setup is for everyone and I would advise traders to try out a few options before committing to one.
