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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 12 , 2011
Our Current Take:
It would appear that the Euro is driving the action this morning (we note that a one-minute chart of the Euro is nearly identical to the S&P and just a minute or so ahead). And frankly, this isn't surprising given the turmoil across the pond. On a chart basis here, it is interesting to note that the S&P is trying to stay above the upwardly sloping trendline drawn on an intraday chart from August 9th. So far at least, it appears that the bulls have been able to hold the line. Thus, we'll be watching the Euro and the 1140 area on the S&P very closely today.
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 1140 and 1120 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: With the indices below their short-term moving averages and the ma's themselves pointing down, it is safe to say that the s.t. trend remains moderately negative. However, we continue to be impressed with the support being shown so far today.
Intermediate-Term Trend: With the indices moving largely sideways over the past couple of weeks, the i.t. trend hasn't budged and remains moderately negative.
Market Internals: Not surprisingly, both of our TBC models flipped back to negative last night. And until the bulls can get these models back to positive for more than a few hours, we will continue to advise caution.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum indicators aren't showing much movement lately. This tells us that although volatility remains high, there isn't much "oomph" behind the moves.
Support/Resistance Zones for S&P 500:
- Current Support: 1140
- Current Resistance: 1175-1200
Early Warning Indicators:
Overbought/Oversold Condition: With the downtrend having resumed, the indices are once again becoming modestly oversold. And with both the short-term and intermediate-term cycles beginning to line up on the oversold side, we will argue that the bulls may have a chance soon.
Investor Sentiment: Sentiment remains a moderately positive input for the bull camp.
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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