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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 21, 2011
Our Current Take:
There is almost nothing positive to say about the technical picture of the U.S. stock market this morning. Support has been broken. Trendlines are gone. The breakout appears to have morphed into yet another fakeout. And short-term moving averages are now pointing downward. As such, it is clear that the bears are back to being in control of the game. The only question now is if the bear camp has the firepower to push the indices to the low end of the range. In short, we'd suggest that despite the favorable seasonality seen at this time of the year, this is no time to be complacent with any positions.
We would consider being short-term buyers at: A successful test of 1180 or close over 1200
We would consider being short-term sellers: A close below 1180 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is very negative at this point as all the news is bad and sentiment is dour.
Intermediate-Term Trend: With the market having been down for much of the past three weeks, the rating of the intermediate-term trend is now neutral at best.
Market Internals: Our short-term TBC model is negative while our intermediate-term model is clinging to a positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: The momentum indicators have been influenced greatly by the risk-on/risk-off moves we've been seeing so much of lately. And with almost all asset classes being closely correlated again, it is clear that the bears have big-mo on their side.
Support/Resistance Zones for S&P 500:
- Current Support: 1180
- Current Resistance: 1200-1220
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are now very oversold from a near-term perspective but only neutral from the intermediate-term view. This would seem to favor the bulls from a s.t. point of view.
Investor Sentiment: Although our sentiment models are neutral at the present time, there is little argument that the s.t. sentiment regarding the macro view is overtly negative. This remains something to watch closely going forward.
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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