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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: August 1, 2011
Our Current Take:
It appears that the weak economic data (Friday's GDP and today's ISM Manufacturing reports) are causing traders to put the economy back at the top of the worry list. Technically speaking, the action is horrid as stocks couldn't celebrate the budget deal, have reversed lower - creating an outside day, and are at new lows for the short-term cycle. Not good if you are a bull or long stocks. Bottom Line: The bears are making a statement.
We would consider being short-term buyers at: A close over 1300 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: The short-term trend is now down and down hard with next to nothing for the bulls to hang their hat on.
Intermediate-Term Trend: With the market near the lows of the current trading range, intermediate-term trend can still be considered neutral.
Market Internals: Both of our TBC model remain in the sell zone this morning. A clear negative.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models have also all fallen into the negative column.
Support/Resistance Zones for S&P 500:
- Current Support: 1260-80
- Current Resistance: 1300
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are now oversold and could enjoy a strong bounce - IF the bulls can find a reason.
Investor Sentiment: Not much new to report as our sentiment indicators continue to remain largely 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: 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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