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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 19 , 2011
Our Current Take:
Although stocks fell hard at the open, the Euro is rebounding and Apple has moved to a new all-time high on an analyst upgrade. Thus, the intraday rebound appears to be on at the moment. However, the bottom line is that last week's rally occurred on light volume and the blue-chip indices remain in a trading range. So, while it appears the buy-the-dip crowd is at work again today, we need to see some actual strength/oomph in the market before we can get excited about the long side here.
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 1190 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: While stocks are down, the s.t. trend remains moderately positive at this stage. But we will also note that there is both support below and resistance overhead. So, it looks like a range with an upward bias at the present time.
Intermediate-Term Trend: The S&P was able to close above its 9-week weighted moving average (which we move forward) last week and this is a good first step. Now we'd like to see the market take out the overhead resistance and breech the 50-day ma.
Market Internals: Our TBC model both remain in the positive zone this morning but the s.t. model is at risk at the present time.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum indicators are starting to slowly perk up. However, in order for the bulls to really get something going, we would need to see a momentum surge.
Support/Resistance Zones for S&P 500:
- Current Support: 1190
- Current Resistance: 1220
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are coming off of a s.t. overbought condition. However, the market remains i.t. oversold. So, if the bears could push the market down long enough for the s.t. to line up with the i.t., they just might have something.
Investor Sentiment: Our sentiment models continue to favor the bulls, but only modestly.
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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