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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: June 8, 2011
Our Current Take:
I'll say it again: The bulls are due a bounce here as the market is oversold and sentiment is becoming dour. But, it appears that unless something good happens soon in the form of a news headline, the bears may continue to have their way for a while. From a technical perspective, the charts are now "broken" and in downtrends. As such, caution remains warranted. We'll be watching to see if traders sell into any rallies that materialize.
We would consider being short-term buyers at: A close above 1300 area on the S&P 500
We would consider being short-term sellers at: A close below 1280 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: Stocks remain in a confirmed downtrend from a short-term perspective. However, the indices are oversold and there is some support in this area.
Intermediate-Term Trend: The intermediate-term trend continues to weaken. While the price trend on a weekly chart is still "okay," the indicators have weakened across the board. As such, we'll call it "neutral" at best right now.
Market Internals: No change again today: Both of our TBC models remain negative.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Momentum continues to favor the bears at the present time. However, we should point out that the momentum indicators are not universally negative at this time. This is a modest positive and supports the idea that a near-term bounce is likely.
Support/Resistance Zones for S&P 500:
- Current Support: 1280 -1285
- Current Resistance: 1300ish
Early Warning Indicators:
Overbought/Oversold Condition: No change today: The market remains oversold from both a short- and intermediate-term basis.
Investor Sentiment: The negativity that is in the market is finally starting to show up in our sentiment indicators. Thus, the sentiment picture is now between the high neutra and moderately positive zones.
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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