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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: July 21, 2011
Our Current Take:
Stocks are moving higher this morning as sentiment over the Eurozone debt crisis and US debt ceiling is improving. In addition, positive US corporate earnings, M&A activity, and a few positive US economic data reports have helped major indices uptick comfortably above their short term moving averages.
The current environment is quite volatile, completely news driven, and range-bound. Thus, with neither situation in the Eurozone or the US resolved yet, stocks could maneuver back down to support (1320) or up to resistance (1345) in a rather timely fashion, depending on how each situation pans out.
Currently, we have short-term support at 1320 and intermediate-term support at 1260. Resistance is overhead in the 1345-1350 region.
We would consider being short-term buyers at: A pullback to 1320 or a break above 1350 on the S&P 500
We would consider being short-term sellers at: A close below 1305 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short term trend, while a bit dicey on a day-to-day basis, is moderately positive. However, this remains a news-driven environment, so quick bursts and plunges can happen.
Intermediate-Term Trend: The intermediate term trend is neutral, as stocks have been maneuvering sideways for roughly 5 months.
Market Internals: Our TBC models reaffirmed their positive rating from Wednesday.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models are currently neutral.
Support/Resistance Zones for S&P 500:
- Current Support: 1320
- Current Resistance: 1345
Early Warning Indicators:
Overbought/Oversold Condition: We are currently neither overbought or oversold. With some volatile sideways action the past few weeks, the market is neutral in this respect.
Investor Sentiment: Our sentiment indicators have given us a mixed bag lately, thus our rating is neutral.
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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