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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 17 , 2011
Our Current Take:
Without any really bad news to send traders scurrying to the sidelines, the bounce phase of the waterfall decline pattern appears to be ongoing. And as we've been saying an upside of 1230 would seem "about right." However, we must keep in mind that history rarely repeats itself exactly. As such, we're on the lookout for an abrupt rally failure. Bottom line: Stay flexible and follow your trading guidelines, this is no time to start "winging it".
We would consider being short-term buyers at: A close over 1210 on the S&P 500
We would consider being short-term sellers: A close below 1175 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: We'll continue to rate the short-term trend as moderately positive. However, we expected to see more "oomph" to the upside by now. Stay tuned.
Intermediate-Term Trend: While the market certainly "feels better" right about now, a quick peek at the weekly chart of the S&P shows that the intermediate-term trend has had considerable damage inflicted. And with the MA's pointing down, we'll continue to rate the I.T. trend as moderately negative.
Market Internals: No change again today. Our short-term TBC model moved into the neutral zone yesterday while the i.t. model remains negative. This is due primarily to the intensity of the recent dive. However, we'd like to see some improvement here before getting too excited about getting long.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models are just now starting to creep forward. The bottom line is I'd prefer to see some more enthusiasm here.
Support/Resistance Zones for S&P 500:
- Current Support: 1175ish
- Current Resistance: 1200-1210
Early Warning Indicators:
Overbought/Oversold Condition: The short-term oversold condition has been worked off and is now quickly becoming neutral. The intermediate-term indicators continue in oversold territory.
Investor Sentiment: Our sentiment models are telling an interesting story. Although there has been huge volatility, sentiment hasn't tanked. Our guess is that players are now accustomed to the violence and may even be a little complacent.
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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