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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 15, 2011
Our Current Take:
Stocks were down slightly this morning but are currently trending higher following a failed Spanish bond auction, and rising yields in Italy and Spain. Though the market is fixated on Europe at the moment, data here in the U.S. was actually quite good. The Producer Price Index showed no inflation in October, Retail Sales rose +0.5%, and the November Empire Manufacturing Index was better than expected.
While the action today has been choppy, we aren't really in a different position, technically, than we were yesterday. The S&P 500 still sits at a crossroads of the 5, 10, and 18 day moving averages, while the intermediate-term trend is still positive. If we were stock-picking, I'd say the S&P 500's chart looks like a great buy right here. However, that is not the case, as this market is driven entirely by headlines. Still, it's a positive for the bull camp that the market hasn't broken down below 1220 amidst all this talk of EU members leaving, Merkel's dramatac diatribe comparing the severity of the Euro crisis to WWII, surging yields, changes in government and leadership, etc, etc.
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, maintain our 'neutral' rating of the short-term trend.
Intermediate-Term Trend: We rate the intermediate-term trend as 'positive' as there is a distinct uptrend since the October 3rd 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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