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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 26, 2011
Our Current Take:
While the markets are largely in wait-and-see mode at the present time, we do see some dip-buying occurring this morning. Thus, traders may be placing their bets and "buying the rumor" so to speak on the idea that a deficit deal will get done before the clock strikes midnight.
We would consider being short-term buyers at: A successful test of 1325 or a close over 1360 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: Although the mood can change quickly, we feel the current action is fairly constructive. However, there is resistance overhead to deal with. And if the news on the "deal" becomes negative, the near-term support is likely to be of little help.
Intermediate-Term Trend: Sorry for the broken record but with stocks having moved sideways for the past five months - the intermediate-term trend is largely neutral.
Market Internals: Our short-term TBC model fell to neutral this morning, which, while not exactly negative, means there is little conviction at the present time.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: The momentum indicators are once again neutral this morning.
Support/Resistance Zones for S&P 500:
- Current Support: 1325-20
- Current Resistance: 1352-60
Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain slightly overbought on a short-term basis and neutral from an intermediate-term perspective.
Investor Sentiment: No real change once again today. Our sentiment indicators continue to be a mixed bag and remain neutral at the present time.
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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