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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 10 , 2011
Our Current Take:
The speed at which moves are now happening makes getting one's bearings in this market difficult. We could easily argue that the waterfall decline saw an emotional low on Monday and that Tuesday's blast higher was the start of the rebound. However today's action would seem to suggest that the initial decline phase may not yet be over (the DJIA is currently at what would be a new closing low). And then to complicate matters further, the chart of the NASDAQ chart is in between the two concepts. As such, we'll be watching to try and determine where we are within the "waterfall decline" pattern.
We would consider being short-term buyers at: A close over 1200 on the S&P 500
We would consider being short-term sellers: A close below 1120 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: While the s.t. moving averages are closing fast on the indices, until the market settles down and creates some support (this may be happening now), we will continue to rate the trend as negative.
Intermediate-Term Trend: No change today... Since the moving averages we follow on the weekly charts are now moving down we will have to rate the i.t. trend as negative.
Market Internals: No change AGAIN today... Both of our TBC models remain negative and in the sell zone.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Ditto AGAIN... Our momentum models remain 100% negative today.
Support/Resistance Zones for S&P 500:
- Current Support: 1120ish
- Current Resistance: 1175-1200
Early Warning Indicators:
Overbought/Oversold Condition: Sorry for the broken record but stock indices remain very oversold from both a short-term and intermediate-term perspectives.
Investor Sentiment: Our sentiment indicators are steadily improving (meaning that sentiment is becoming more dour by the day). This will be a plus for the bulls at some point.
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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