How to Recognize Intra-Day Buying Orderflow: My 1,2,3 Internals

As I'm typing this (roughly 11:00 a.m. central time) I'm watching what appears to be the end of a great short term buying opportunity. It could push higher, but the initial momentum is definitely over for now. This was one of the best upmoves I've seen in at least a week. Fortunately, I was able to recognize that I needed to be long and was able to catch a piece of the move, although I left a little on the table because booking profits lately has been very difficult due to the choppiness of the market.

How did I recognize the intra-day buying order flow? The big signal was the market internals. There are several things I monitor at all times while day trading and these are the big 3 (note that I didn't include the cumulative tick in this list...i always watch the tick as well but it's more common so I'll leave that alone for now). The big 3 are: 1) Advancers vs. Decliners, 2) Up Volume v. Down Volume, 3) the Vix vs. SPY. I plot all of these with intra-day line charts. Here's a screen shot from just little while ago:As you can see from the above pic, it was time to be long. In 1, the advance line was way above the decline and they were heading in opposite directions (bullish), in 2 the up volume was above the down volume and they were heading in opposite directions (bullish), and in 3, the Vix was maxed at the very bottom of the chart and the SPY was at the top (very bullish). When I see the 3 internals cross and start heading in opposite directions, I know to be ready to trade. On choppy days that are hard to trade, you'll see these cross back and forth several times...a sign that it's very choppy and you have to have low expectations of follow through if you trade at all.

Today I saw buying pick up and the internals got bullish and I knew it was time to stop shorting financials, which was chopping me around a little, and look at my list of potential longs. My big long of the day was NVDA. NVDA had awesome relative strength this morning as it was able to hold a gap up and then continue higher even as the market was heading lower. A stock with that kind of strength has the potential to pop if the market starts heading higher and that's what it did. All-in-all, it's been a good day and now I'm just going to sit back and watch for the rest of the day.

I hope everyone is having a profitable week/month so far and I'll be back with another post soon.

TLT