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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 9 , 2011
Our Current Take:
Although stocks are lower this morning on a number of concerns, the good news is that, so far at least, the dip buyers have been very active this week. In looking back at this week's sessions, it is clear that any and all dips have been bought. Perhaps this is due to the long-only mutual fund managers continuing to buy at current prices. Or maybe traders continue to believe that the current decline will end in the same fashion as last summer's swoon did. But in any event, there are two key technical points to make today. First, the dips are being bought. And second, the pattern of higher-highs and higher-lows remains intact.
We would consider being short-term buyers at: A close over 1200 and 1230 on the S&P 500
We would consider being short-term sellers: A close below 1160 and 1120 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend has moved back to neutral this morning as the up-one-day, down-the-next environment continues. We'll also note that the s.t. ma's are starting to bunch up here.
Intermediate-Term Trend: Sorry, but no change again today the i.t. trend remains moderately negative.
Market Internals: Both of our TBC models flipped back to neutral last night. This is a solid confirmation of the current environment.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models have also done a decent job at providing insight into the current environment. These indicators remain neutral and moderately in the red.
Support/Resistance Zones for S&P 500:
- Current Support: 1175
- Current Resistance: 1200-1220
Early Warning Indicators:
Overbought/Oversold Condition: The overbought/sold indicators provide neither team much of an edge at the moment from a near-term perspective.
Investor Sentiment: We continue to be perplexed by our sentiment indicators. While still moderately positive, they are not as universally positive as we'd expect. This remains something to watch as it suggests a fair amount of complacency in the market.
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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