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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 16 , 2011
Our Current Take:
If the NASDAQ was viewed by the investing public as the primary index to watch, we would be fairly excited about the action right now. Thanks to the rebound in the semis, the NASDAQ has broken out and appears to be launching into a new uptrend. As such, this morning's pullback would be viewed as a test of support and what we like to call a "second chance buy point" after a breakout. However, at this point, the NASDAQ stands alone as none of the major indices have followed suit. So, with the trading range still intact in the other indices, we will continue to watch to see if the NASDAQ is the new leader or if it will fall victim to the dreaded breakout-fakeout.
We would consider being short-term buyers at: A close over 1220 on the S&P 500
We would consider being short-term sellers: A close below 1200 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The s.t. trend remains positive at this stage. However with a test of 1220 having so far failed, we would be concerned about a close below 1200.
Intermediate-Term Trend: Sorry to report that once again, there is no change. From our view, the i.t. trend remains moderately negative. The good news is that the S&P is approaching its i.t. ma's. Thus, any further strength could produce a change in status.
Market Internals: Our TBC model both remain in the positive zone.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Yesterday, we said we wanted to see something from our momentum indicators. Today, one of the three models did uptick and gave a buy signal. However, the caveat is that you needed a magnifying glass to tell that the signal was given.
Support/Resistance Zones for S&P 500:
- Current Support: 1200
- Current Resistance: 1220
Early Warning Indicators:
Overbought/Oversold Condition: From a short-term perspective, stocks are now quickly becoming overbought while the i.t. picture still favors the bulls.
Investor Sentiment: Our sentiment models are starting to become less bullish here. This isn't surprising as the view on the street seems to favor more upside. (We don't necessarily agree, but that seems to be what we're seeing in our indicators.)
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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