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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: April 14, 2011
Our Current Take:
Although the bears are clearly in control of the game at the present time, it is important to note that they have been unable to make much progress to the downside to date. However, given the fact that the buyers appear to be content on the sidelines at the moment, a sell program or three could easily change this. We're watching support at 1300 and a potential head-and-shoulders bottom pattern forming on the S&P. We will also note that stocks are now oversold from a short-term standpoint. Thus, a bounce would be logical in the near-term.
We would consider being short-term buyers at: A pullback to 1300 or a break above 1315 on the S&P 500
We would consider being short-term sellers at: A close below 1309 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains moderately negative today. And with the bears on the verge of breaking support, the trend rating could lose some more ground if the bears can gain some momentum here.
Intermediate-Term Trend: Our rating of the intermediate-term trend remains moderately positive. However, should the sideways action morph into a decline, the trend rating would likely be downgraded.
Market Internals: Our TBC models are unchanged at this point. We'd watch the 25-day moving average as a break below would be a clue that both models could decline.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models remain neutral have finally started to move lower and any further decline in the model readings would indicate that the pullback has farther to run.
Support/Resistance Zones for S&P 500:
- Current Support: 1300
- Current Resistance: 1320
Early Warning Indicators:
Overbought/Oversold Condition: The indices are now moderately oversold on a short-term basis while the intermediate-term picture remains neutral.
Investor Sentiment: Our sentiment indicators have improved a bit this week as some fear has crept into the mix. However, the readings remain moderately negative this morning.
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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