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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 20 , 2011
Our Current Take:
With the S&P back at 1220, it's "game on" in terms of testing overhead resistance. The bulls will point to the NASDAQ as the new leader and suggest that the rest of the indices are likely to follow along at some point soon. Of course, those with a less optimistic view are quick to counter with the idea that a trading range is a trading range until proven otherwise. So, we're watching 1220 on a closing basis with mucho interest in front of "the call", the Fed and the G-20.
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: Although the trading range remains intact at this moment, the short-term trend is positive as the S&P is above its upwardly moving ma's. In addition, we're watching to see if the ma's themselves can move to higher highs here.
Intermediate-Term Trend: Besides the 1220 area, the S&P next big hurdle is the 50-day, which just happens to be at 1223 this morning. Thus, if the bulls can push on through, the trend and momentum players will likely pile on.
Market Internals: Our s.t. TBC model flipped back to neutral this morning but it could easily move back up to green if the rally holds.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum indicators continue to improve. However, there is much a lot of room for improvement before we can call them positive. And in short, our momentum models MUST accompany any breakout if the move is to be taken seriously.
Support/Resistance Zones for S&P 500:
- Current Support: 1190
- Current Resistance: 1220
Early Warning Indicators:
Overbought/Oversold Condition: The S&P is once again in overbought territory. This remains something to watch as a key tell as to whether the bulls can break on through or if this was just another trip through the range.
Investor Sentiment: No change today...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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FOMC stimulus to be announced tomorrow should be a positive. On the NASDAQ, the recent breakout of APPLE to near 420 area is encouraging. This time of year Technology usually picks up which could be another positive for the market. If volitility drops below 30, WATCH OUT ON THE UPSIDE !!!