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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: September 8 , 2011
Our Current Take:
Stocks are trading higher in front of speeches by Bernanke and Obama. It would appear that traders are assuming that more stimulative efforts are on the way. And while the effectiveness of such programs remains a massive question mark, the idea that stimulus is positive "for a trade" is all that matters. At the moment, the S&P is testing the 1200 level, which is the .382 Fibonacci retracement level of the July-August decline. However, the real resistance is slightly higher. The bottom line is that at this point in time, the chart action isn't really "saying" much as the markets remain rangebound and tied to the headlines.
We would consider being short-term buyers at: A close over 1220 and 1230 on the S&P 500
We would consider being short-term sellers: A close below 1190 and 1120 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend continues to lean positive this morning as hope has taken over. However, there is resistance overhead and the action at these levels should be very telling.
Intermediate-Term Trend: No change again today the i.t. trend remains moderately negative. A weekly close above 1200-1220 would be a step in the right direction as far as the bulls are concerned.
Market Internals: Our short-term TBC model reversed yet again overnight and is now neutral. However, in a rare occurrence, our intermediate-term model moved straight to positive. This can be considered a positive for the bulls.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Unfortunately, our momentum models continue to flatline. As we've been saying, we will need to see momentum improve before the bulls have any hopes of doing anything more than bouncing around within a range.
Support/Resistance Zones for S&P 500:
- Current Support: 1175
- Current Resistance: 1200-1220
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are quickly becoming modestly overbought from a short-term perspective. However, the bulls can take solace in the fact that the indices remain oversold in the intermediate-term picture.
Investor Sentiment: Sentiment, like the momentum indicators, has been strangely flat of late. It appears that there is a fair amount of complacency amongst the bull camp at the present time as the thinking seems to be that this is a replay of last summer/fall.
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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