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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: October 26, 2011
Our Current Take:
Putting the HFT activity tied to the headlines out of Europe aside, the market appears to be pulling back and testing the breakout level. Again, if we can remove ourselves from the "will they or won't they?" worries across the pond, this would appear to be a constructive move so far. Our view is that as long as the S&P can stay above 1220, the bulls should be given the benefit of any doubt. But as an aside, good luck trying to avoid all the emotion when the computers move the markets as fast as they do!
We would consider being short-term buyers at: A successful retest of the 1225 area
We would consider being short-term sellers: A close below 1220 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The anticipated near-term pullback is happening and so far at least, the support (and the breakout) remains intact.
Intermediate-Term Trend: No change today - We will continue to call the i.t. trend moderately positive.
Market Internals: Although this could change quickly if things get ugly again this afternoon, all three of our TBC models remain positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: The momentum models continue to show that there is a lack of oomph behind the market. This is likely due to the trepidation in front of the EU summit. But it is important to remember that the bulls can't go very far without the momentum indicators backing them up.
Support/Resistance Zones for S&P 500:
- Current Support: 1220
- Current Resistance: 1265
Early Warning Indicators:
Overbought/Oversold Condition: The short-term overbought condition is being worked off a bit this morning. However, things remain largely overbought in the s.t. and still are neutral from the intermediate-term view.
Investor Sentiment: Our sentiment indicators have fallen back below the zero line. And while the model scores are technically red, the models remain neutral on balance.
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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