Technical Talk: Slightly Lower, But Still Range-BoundSeptember 30, 2011 @ 12:36 PM EST
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 30, 2011
Our Current Take:
Stocks are trading lower this morning following a disappointing China PMI and the ECRI announcing it believes the US is heading into a recession. Yesterday's choppy action was not encouraging for the bulls. Despite finishing in the green on Thursday, major indices sold off intraday through a positive US GDP report and word that Germany had passed a critical vote on the EFSF, two headlines that would usually drive stocks higher. Stocks are negative once again today, unable to climb into positive territory despite two additional positive economic reports. It seems the sentiment overhang from Europe is keeping markets in the current trading range. It would seem unlikely that we break out to either side until the situation in Europe changes significantly.
We would consider being short-term buyers at: A close over 1220 on the S&P 500
We would consider being short-term sellers at: A close below 1120 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: Short-term moving averages are mostly flat and major indexes haven't made a commitment in either direction this week. Thus, our short-term trend rating is neutral.
Intermediate-Term Trend: Since the end of the waterfall decline in early August, stocks have been shuffling sideways for weeks. Thus, we reaffirm our i.t. trend rating as moderately negative but with decent support at 1120 on the S&P 500.
Market Internals: Our TBC models fell into moderately negative territory this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models slightly negative.
Support/Resistance Zones for S&P 500:
- Current Support: 1120
- Current Resistance: 1220
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are neutral from a short-term perspective, though still slightly oversold from in the intermediate-term.
Investor Sentiment: Our sentiment indicators favor the bears, which is generally positive for stocks.
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: 150 day weighted ma (light orange), 50 day weighted ma (purple), 18 day weithged ma (cyan), 10 day weighted ma offset by 2 days (orange), 5 day weighted ma offset 2 periods (dashed blue) and stochastic %K using 14 and %D.
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