Technical Talk: It's a Consolidation Phase - Play Accordingly
November 8, 2011
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: November 8, 2011
Our Current Take:
Although we've seen the usual intraday volatility so far (first up and then down), our overall view hasn't changed much. In short, we see the current market action as a consolidation of last month's big pop and as long as the S&P can stay above 1220, we'd give the bulls the benefit of any doubt. Remember, a market usually exits a consolidation phase heading in the same direction it was going before it entered the consolidation. In this case, that means the resolution to the consolidation should be to the upside. Strange as that may sound in this uncertain world, that's the way we read the charts right now. Bottom line: buy the dips.
We would consider being short-term buyers at: A close above 1260
We would consider being short-term sellers: A close below 1220 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: Although the bears could get busy at any time given the potential for market-moving headlines, the short-term trend is improving. We'll call it moderately positive today.
Intermediate-Term Trend: No change in the i.t. trend today. We'll continue to rate the trend as moderately positive. We will also note that it is a positive that our 10-week ma has now crossed back above our 27-week.
Market Internals: No change... All three of our TBC models remain positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Although some folks would like to see more oomph from the bulls here, our take is that the momentum models are in good shape for a consolidation period.
Support/Resistance Zones for S&P 500:
- Current Support: 1220
- Current Resistance: 1260-1285
Early Warning Indicators:
Overbought/Oversold Condition: The overbought/oversold models are all neutral this morning. This is actually a positive at the present time.
Investor Sentiment: Our sentiment models continue to be a mixed bag today. As we said yesterday, we wouldn't put too much emphasis on this area at the present time. Sometimes indicators don't have much to "say."
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.
