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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 16, 2011
Current Strategy:
Given the violent moves caused by the boys and their fancy computer toys, analyzing the technical action is more than a little difficult at this point in time. The problem is akin to the question of whether or not a tree falling in the woods makes any noise if no one is there to hear it. My point is that this morning's big dive was attributed to computer program selling that was triggered by a news report that was old and possibly even taken out of context. So, does the ensuing selloff and "retest" of yesterday's lows count? Pure technicians say yes, but I'm not so sure. So, we will note that we're currently seeing a retest of yesterday's emotional low, which means that a rebound is likely close at hand.
We would consider being short-term buyers at: A close above 1289 on the S&P 500
We would consider being short-term sellers at: A close below 1260 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: Not much to report here... the trend is down from a near-term perspective.
Intermediate-Term Trend: While we are not sure that stocks will stay down (intraday traders do enjoy their volatility), at this point, the market is in danger of being downgraded from a weekly chart perspective.
Market Internals: No change again today as our TBC models remain solidly negative.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: No change in our momentum models. One is on a sell and the other two possess moderately negative readings - but not yet on sell signals. (Recall that these indicators are oriented toward the intermediate-term picture.)
Support/Resistance Zones for S&P 500:
- Current Support: 1260
- Current Resistance: 1295
Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain oversold from a short-term perspective and the intermediate-term models are rapidly becoming oversold as well.
Investor Sentiment: Sentiment continues to weaken, which, as we said yesterday, is considered a positive for the market from an intermediate-term standpoint.
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
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