Market internals 0 dte trading

The Market Internals are similar to the instrument cluster on your car, without them you really don’t know which direction you are headed or how fast you’re moving.

The 0DTE Mood Dashboard displays 3 market internal labels: VOL, ADSPD, and TIKSP

The 0DTE Mood Dashboard keeps  trading simple: If VOL > 0 and ADSPD > 0 and TKSP > 0, then SPX is bullish. The higher the number, the more bullish is. If VOL < 0 and ADSPD < 0 and TKSP < 0, then SPX is bearish. The lower number, the more bearish is.  

VOL:

  The VOL or volume ratio composed of volume flowing into up stocks versus volume flowing into down stocks.

The breadth ratio is expressed: Up Volume / Down Volume.

This reading is important in relation to where it has been, especially where we are now compared to where we opened on the day.

For example:

If at 10:00 AM we have 10M shares moving up and 5M shares moving down, the resulting breadth ratio is 2:1 positive (10M/5M), twice as much volume is flowing into up stocks as down stocks.

If at 10:30 AM the market has sold off but we now have a breadth ratio of 3:1 positive, this is a signal that the markets are actually becoming stronger and it’s time buy the pullback, so look for a long setup.

Out of all four internals, the VOL is the most important.

ADSPD:

The ‘Advance/Decline Line’ or ‘A/D Line’ for short, is the second most important of the internals. This indicator tells us the net sum of advancing stocks minus declining stocks.

The A/D Line is expressed: # of Advancing Stocks – # of Declining Stocks

SPX is made of 505 stocks. An A/D Line reading of 250+ is very bullish and a reading of over 300 is extremely bullish. On the flipside readings of -250 and below are very bearish and readings below -300 are extremely bearish.

These extreme readings are indicative of trending days where once the market continues to trend all the way into the close. We look to the A/D Line in conjunction with the Breadth Ratio to confirm these trend days.

For example:

A day with 400 advancing stocks and only 105 declining stocks would yield a net of +295 (an extremely bullish reading). It would take a large catalyst to shift the market direction with a reading this bullish.

If on the open you continue to see the A/D Line moving +200, +300, +400, this is a sign of market strength. If however, the market is moving higher, but the A/D Line is moving lower, a divergence has occurred and could be a sign of a market turn.

It’s important to look to the other market internals for confirmation as one indicator alone is not sufficient to confirm a move.

TIKSP: 

The SPX tiksp Index gives us the relationship of stocks up ticking versus down ticking at their last traded price. The Tick is an extremely useful tool for intraday traders. If more stocks are trading higher, then SPX is bullish. 0 dte trading