Technical Talk: Here's The Plan For a Consolidation Phase
March 4, 2011
Sign Up to Receive an Email Alert when Technical Talk is Updated
Although we disagree with the idea that "the tape tells all," it is important for all traders to stay on top of key technical happenings on the charts. Below is our current "executive summary" take on the State of the Tape.
Technical Talk: March 4, 2011
Current Strategy:
Given that we believe that this remains a consolidation phase, it is probably best to implement the following rule: Do nothing, absolutely nothing, until there is something to do. While that may sound moronic at first, the key message is to avoid making overtrading in these types of sideways environments. And given that it is a Friday and as such, traders will likely want to avoid headline risk over the weekend, we feel it is a safe bet that the consolidation is not going to be resolved today.
We would consider being short-term buyers at: A close above 1331 on the S&P 500
We would consider being short-term sellers at: A close below 1300
Trend and Momentum Indicators:
Short-Term Trend: Although the short-term trend has clearly improved, remains neutral-to-moderately-positive at this time.
Intermediate-Term Trend: No change. The S&P chart continues to look solid from an intermediate-term perspective.
Market Internals: Our TBC models both moved up into the positive zone in response to yesterday's rally. And so far at least, both remain in the positive mode today.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models are still kind of a mess. In short, this is a good indication that we've got a consolidation phase on our hands.
Support/Resistance Zones for S&P 500:
- Current Support: 1300ish
- Current Resistance: 1330 - 1340
Early Warning Indicators:
Overbought/Oversold Condition: From a short-term perspective, the market is neutral at this time. But when looking at things from the intermediate-term view, the market remains overbought.
Investor Sentiment: As we've been saying, our sentiment indicators continue to sit in moderately negative zone. The optimism that was present two weeks ago is slowly being worked off, but this is a process that takes a while.
Chart Watch:
Below are snapshots of the two main charts we watch closely each day from a technical perspective. The indicators we display on the charts below include: 50 day weighted ma (purple), 18 day weithged ma (cyan), 10 day weighted ma offset by 2 days (orange), 4 day weighted ma offset 2 periods (dashed blue) and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of TopStockPortfolios and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
The information contained in our websites and TopStockPortfolios publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.
Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.
