Sign Up to Receive an Email Alert when Technical Talk is Updated
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: October 6, 2011
Our Current Take:
With only a couple of exceptions, the market has been moving in one-directional trends since August 10th. For a period of roughly 3-5 days stocks will go one way and then reverse. Thus, it is not surprising to see stocks continue to rally today after the "great save" that took place on Tuesday afternoon at 3:45 pm eastern. So, our takeaways are this: a) stocks remain in a trading range and b) the downtrend that began on 9/16 remains intact at the present time.
We would consider being short-term buyers at: A close over 1180 on the S&P 500
We would consider being short-term sellers: A close below 1100 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend has clearly improved. However, given the recent one-directional trends, we'd like to see a trendline break or a move above the 50-day ma in order to be convinced that this isn't just another one-way trip through the range.
Intermediate-Term Trend: Although the bounce has been impressive in terms of price movement, the i.t. trend remains down. We'll need to see a break of a weekly ma or at least the 50-day broken before we can consider upgrading the trend.
Market Internals: Our short-term TBC model moved to neutral overnight. However, we will likely need to see a move above S&P 1170 before the other two models can improve.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models are slowly gaining some ground but remain moderately negative on balance. At the very least, we will need to see the volume relationship improve.
Support/Resistance Zones for S&P 500:
- Current Support: 1120
- Current Resistance: 1180, 1220
Early Warning Indicators:
Overbought/Oversold Condition: The short-term oversold condition has now been completely worked off. But with the i.t. situation still favoring the bulls, the "hope" rally could certainly continue.
Investor Sentiment: Ditto from yesterday: Our sentiment models also continue to favor the bulls as the mood in the market had become overly negative before "great save" on Tuesday.
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
The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of stateofthemarkets and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Stocks should always consult an investment professional before making any investment.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
The information contained in our websites and publications is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer.
Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.
