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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 28, 2011
Our Current Take:
Today are climbing higher once again this morning following decent home price data and positive retail sales, but more importantly as optimism over the austerity vote in Greece builds. Greek lawmakers have been debating new austerity plans and will vote soon. Government spokespman Elias Mossialos said his personal opinion is that "both the medium-term program and the implementing legislation will be supported by the entire Socialist parliamentary group." Also worth noting is that Thomas Robopoulous, a socialist deputy who has threatened to block the austerity package, has hinted that he may ultimately be in favor of the plan.
1260 still remains as the key support level on the S&P 500. The bulls have made another nice push this morning breaking through a number of short term moving averages (5dma, 10dma, 18dma). However, it will ultimately be up to how the vote turns out, and subsequently how the market reacts to the decision. If the vote passes, it is likely we will push up through 1300. If the vote fails, we could see another retest of 1260, and possibly dip lower if contagion fears across EU banks take hold. For now, we will watch the action as we wait for a decision out of Greece.
We would consider being short-term buyers at: A close above 1300 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: Although stocks are rallying again this morning, we are currently 3 points higher on the S&P 500 from where we closed 5 sessions ago, and 5 points higher from the close 10 sessions ago. Thus, we rate the short-term trend is neutral.
Intermediate-Term Trend: No change today in the intermediate-term trend. We continue to rate the trend moderately negative. We would need to see a move back above 1300 before considering an upgrade.
Market Internals: Our TBC models give us a moderately negative rating today.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Given the heavy upward thrust this week, our momentum models have been pushed from negative up to neutral.
Support/Resistance Zones for S&P 500:
- Current Support: 1260
- Current Resistance: 1295 - 1300
Early Warning Indicators:
Overbought/Oversold Condition: Slightly oversold. While we are out of the oversold zone in the short term, we are still oversold in the intermediate term.
Investor Sentiment: Sentiment is negative, which favors the bulls. In essence, this means that those who wanted to sell have likely done so.
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: 150 day weighted ma (light orange), 50 day weighted ma (purple), 18 day weithged ma (cyan), 10 day weighted ma offset by 2 days (orange), 5 day weighted ma offset 2 periods (dashed blue) and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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