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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 20, 2011
Our Current Take:
Although stocks will likely continue to be slaves to the news, conditions are improving for a countertrend rally. We would view a close over 1295 as a strong indicator that the corrective phase has ended and then a close over 1300 as an additional buy signal.
We would consider being short-term buyers at: A close above 1292 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: The sideways movement seen over the last five days or so appears to have built a decent base on the S&P. We'll call the s.t. trend neutral at the moment and would expect to see some upside testing from here (unless, of course, the news flow turns south).
Intermediate-Term Trend: Although the short-term trend appears to be improving slightly, the intermediate-term trend remains at risk here as there is now a lower-low on the weekly chart.
Market Internals: Our short-term TBC model has moved up to neutral, which is the first step in the improvement process. These models may be the key to the bulls' future. In short, unless breadth can show some oomph on the way up, the rally can't go very far.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models actually upticked a modest amount from Friday. This is a hopeful sign but these models need to improve further before we can get too excited.
Support/Resistance Zones for S&P 500:
- Current Support: 1261
- Current Resistance: 1280-1300
Early Warning Indicators:
Overbought/Oversold Condition: Stocks have been oversold for some time now, which is a sign that the bulls are set up to be able to make a comeback at some point.
Investor Sentiment: Sentiment continues to be negative, which is a condition that should help the bulls' cause in the near-term.
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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The latest technical talk advised to buy at a 1292 close what changed ?