Technical Talk: Bulls Ball, But Bears Looking For Turnover
March 28, 2011
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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 28, 2011
Current Strategy:
With the end of the quarter in sight, it would be logical to assume that some window dressing might be in order right about now. However, we should keep in mind that the major indices are bumping into resistance at these levels and as such, may encounter some selling at some point. In short, the bulls have gotten back in the game over the past week and currently have possession of the ball. However, the bear defense is clearly looking for a turnover at this point.
We would consider being short-term buyers at: A pullback to test 1305 or a close above 1330 on the S&P 500
We would consider being short-term sellers at: A close below 1279 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is currently positive. However, the momentum hasn't been stellar, so expectations for a continued advance are not exactly a slam dunk.
Intermediate-Term Trend: The intermediate-term trend remains neutral/moderately positive.
Market Internals: Our TBC models are both positive this morning. This is an encouraging sign for the bulls. However, the momentum models...
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models have not yet jumped on the bull bandwagon. Keep in mind that these are closing-basis models and a little longer-term than some of our trend indicators. Thus, should these models move back up into the buy zone, we would have more confidence regarding the prospects for higher prices.
Support/Resistance Zones for S&P 500:
- Current Support: 1305
- Current Resistance: 1330
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are now becoming overbought from a short-term perspective but are only neutral when look at the intermediate-term picture.
Investor Sentiment: Sentiment continues to be mostly neutral at this point. The extreme optimism has been worked off, but the quick resumption of the rally did not allow sentiment to become negative enough for our indicators to turn positive.
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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