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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: November 14, 2011
Our Current Take:
Stocks are sinking again this afternoon. Optimism surrounding Europe had been improving as Italy and Greece resolved their leadership issues (at least for now), and Merkel mentioned the idea of the EU needing a "Political Union." However, pressure from heightened yields in Italy, and a weak earning announcement from Italy's largest bank seemingly erased the optimism and put the focus back on the Euro zone's massive debt problems. From a technical standpoint, the S&P 500 is still hovering well above its critical support at 1220. It is currently resting on an intersection of its 5, 10, and 21 day moving averages.
While technicals haven't meant too much in this headline-driven environment, major indices are in pretty good shape considering all of the uncertainty in Europe. The S&P 500's intermediate-term trend is now decidedly positive, and longer term moving averages are beginning to flatten out (150dma) and trend upwards (50dma). Still, in this environment, we could be back at 1220 or up to 1275 in a moment's notice.
We would consider being short-term buyers at: A close above 1275
We would consider being short-term sellers: A close below 1220 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: Since October 24, the market has been moving sideways in volatile swings driven by the sentiment surrounding Europe. Thus, we rate the short term trend as neutral today.
Intermediate-Term Trend: We rate the intermediate-term trend as Positive. The 50-dma on the S&P 500 is now trending upwards, as the index has made significant progress upward since the October 3 lows.
Market Internals: No change... All three of our TBC models remain positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models are neutral today as we have seen big pushes in both directions this past week.
Support/Resistance Zones for S&P 500:
- Current Support: 1220
- Current Resistance: 1275-1285
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. We wouldn't worry too much about this indicator at the moment, as sometimes indicators don't have much to tell us.
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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