Technical Talk: Both Teams Have Something To Crow About
January 6, 2012
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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: January 6, 2012
Our Current Take:
The technical picture (as well as the pattern of the daily trend) hasn't changed much over the past three sessions. It appears that after an initial surge higher on the first trading day of the year, stocks have stalled out. Of course, this gives both teams something to talk about. The bears tell us that with a market that is overbought and bumping into resistance, lower prices are to be expected. On the other hand, the bulls argue that there has been "real" buying going on this week and that the bears have been unable to do anything with their overbought opportunity. While a pullback is to be expected, we'd lean toward the bull camp at this stage.
We would consider being short-term buyers at: A successful retest of 1265 or a close above 1285 on the S&P 500
We would consider being short-term sellers: A close below 1247 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains is still moderately positive. However, three days of waffling has taken its toll on our trend-strength and momentum indicators.
Intermediate-Term Trend: No Change... The intermediate-term picture is currently moderately positive as the weekly ma's we watch are moving in the right direction (for the bulls).
Market Internals: Our TBC models are both still positive this morning - this remains a plus for the bull camp.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: The momentum indicators did improve earlier in the week and we saw green lights on all the models for the first time in a while. However, this morning the indicators have pulled back a bit and are moderately positive.
Support/Resistance Zones for S&P 500:
- Current Support: 1265
- Current Resistance: 1285
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are still overbought from a short-term view and remain neutral from an intermediate-term perspective.
Investor Sentiment: Our sentiment indicators continue to be a mess. Bottom line is the group is neutral-to-moderately negative.
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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