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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 30, 2011
Our Current Take:
Stocks are trading mixed following a weaker than expected Consumer Confidence Index reading. After a morning of sharp declines, major indices have rallied back towards green territory ahead of the FOMC Minutes release at 2:00pm EST. A number of positive technicals have popped up in this week's market, though it will be important to observe how the market reacts to the minutes release. This morning, traders shook off a dismal Consumer Confidence Index reading, which can be viewed as a major positive for the bulls considering they rallied through what could have caused another flush like we've seen so many times in the past few weeks. Nevertheless, the S&P 500 is still wrestling around in the 1205-1210 zone, which is critical to break above should the bulls wish to make this session convincing.
We would consider being short-term buyers at: A close over 1210 on the S&P 500
We would consider being short-term sellers at: A close below 1120 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains positive today following this past week's rally.
Intermediate-Term Trend: Despite this past week's rally, the intermediate term trend remains moderately negative. With the 50-day moving average still on a negative slope and the S&P 500 still 100 points below its levels last month, it would take a sizable rally to push the trend back to neutral.
Market Internals: Our TBC models upticked to positive today.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models remain negative.
Support/Resistance Zones for S&P 500:
- Current Support: 1175
- Current Resistance: 1205-1210
Early Warning Indicators:
Overbought/Oversold Condition: The recent rally has pushed stocks into the overbought territory for the first time since early July. However, stocks are still oversold in the intermediate-term.
Investor Sentiment: Our sentiment indicators are positive this morning as the recent rally continues to build back some investor confidence.
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: 150 day weighted ma (light orange), 50 day weighted ma (purple), 18 day weithged ma (cyan), 10 day weighted ma offset by 2 days (orange), 5 day weighted ma offset 2 periods (dashed blue) and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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Many regional indicators around the country pointing toward a "contraction."