Technical Talk: Waiting For the Next Batch of Headlines
August 19, 2011
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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 19 , 2011
Our Current Take:
Markets appear to be attempting to stabilize this morning, which would be a good thing for those hoping that the retest could occur without new lows. However, the jury is still out on this question from both a fundamental and technical perspective. So, we will wait for the next batch of headlines and see how the market responds. For now, we will be watching the action a looking for clues.
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 1120 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is negative once again as the bulls must now attempt to find some support to lean against. So far at least, it appears that yesterday's lows will fit the bill.
Intermediate-Term Trend: Sorry for the broken record but we'll continue to rate the I.T. trend as moderately negative.
Market Internals: Both of our TBC models remain negative. We view this as a yellow light at this stage.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models continue to wane as the only upside moves were not accompanied by much internal strength.
Support/Resistance Zones for S&P 500:
- Current Support: 1120ish
- Current Resistance: 1175
Early Warning Indicators:
Overbought/Oversold Condition: The short-term oversold condition is now back. But let's remember that in corrections and bear markets (yea, I said it), the market can remain oversold for extended periods of time.
Investor Sentiment: We continue to watch our sentiment models closely as they have yet to identify an extreme negative environment. This is not in sync with those looking for a quick rebound and a resumption of the uptrend.
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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Blackrock CEO said on CNBC that market with be UP for the year as a whole. We need more OPTIMISIM like that by EVERYONE before we talk ourselves into a RECESSION. There was no excessive bullishness at this years top of 1363 on S&P that usually accompanies market tops. This present CORRECTION is driven by purely MACROECONOMIC ISSUES in Europe and the USA DEFICIT REDUCTION debacle and by IRRATIONAL FEAR ---- everyone runnung for the exits and buying GOLD and/or money market funds --- GOLD bubble will pop to the tune of a 200+ point decline at some point.