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: December 9, 2011
Our Current Take:
Yesterday's hysterics are being reversed to a large degree this morning as the "Euro-style Lehman moment" (i.e. a big bank failure in Europe) appears to have been taken off the table for the time being. From a technical standpoint, the rebound has reinforced the near-term support. However, it is also worth noting that while the green on the screen is enjoyable for the bulls, the indices remain rangebound. As such, the bulls will need to push the S&P decisively through the 1260 level in the near term if they have eyes on a Santa rally.
We would consider being short-term buyers at: A close above 1260 on the S&P 500
We would consider being short-term sellers: A close below 1240 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: Although the screens are green this morning, we'll stick with yesterday's view that (a) the short-term trend is only modestly positive and (b) the indices are continuing to consolidate the recent rally. So, we will need to keep a close watch on the near-term support and resistance levels.
Intermediate-Term Trend: With all the up-and-down action seen recently, it is easy to lose sight of the int. term trend. However, with our trend models moderately positive and the 27-week ma currently flat as a pancake, the truth probably lies somewhere in between a neutral and moderately positive reading.
Market Internals: Our TBC models are mixed this morning, which is indicative of the current environment.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models weren't affected much by yesterday's dive. However, the bulls will need some oomph if they hope to make it a happy holiday season.
Support/Resistance Zones for S&P 500:
- Current Support: 1240
- Current Resistance: 1260-80
Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain overbought this morning from a near-term perspective and the intermediate-term indicators are neutral.
Investor Sentiment: The shorter-term sentiment continues to be whipped back and forth with each passing headline, rumor, and announcement. From an intermediate-term perspective, our sentiment indicators are completely neutral at the present time. As we've been saying, this is likely due to the extreme volatility seen over the past four months.
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.
