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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 30, 2011
Our Current Take:
Stocks continue to rebound furiously on a long list of positive headlines today. Although there is still some resistance overhead it is important to recognize that the computers driving these moves don't seem to care about technical levels. As such, it will be interesting to see how the market reacts at the 1240 level. However, the key technical takeaway at this stage is the fact that despite the misery caused by the seven straight down days seen recently, there is now a "higher low" on the charts. Thus, the next key for the bulls will be to put in a higher high. Stay tuned.
We would consider being short-term buyers at: A close over 1240 or a successful test of 1220
We would consider being short-term sellers: A close below 1200 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend has been a roller coaster ride to be sure. However, the trend is improving once again.
Intermediate-Term Trend: The intermediate-term trend is now neutral. We will be watching the weekly charts for signs of the trend either improving or faltering.
Market Internals: Our TBC models end-of-day oriented. However, we will bet that all three will move to positive if the current 400 point gain holds.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum indicators are also based on end-of-day results. And given that the current move has occurred in a heartbeat, the indicators have not yet had time to catch up. We would expect to see dramatic improvement from the current negative levels in the next day or two.
Support/Resistance Zones for S&P 500:
- Current Support: 1220
- Current Resistance: 1240-80
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are quickly approaching an overbought condition from a near-term perspective. This remains something to watch as the int. term indicators are also beginning to move toward the overbought zone.
Investor Sentiment: While market sentiment is bordering on exuberant this morning, our indicators are no better than neutral at the present time.
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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