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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 10, 2012
Our Current Take:
While we could argue for quite some time as to the macro outlook, the nice thing about technical analysis is we don't need to worry too much about "why" things are happening because according to chartists, "it is what it is." And today, "it" is a breakout to the upside of the recent tight consolidation phase. This puts the bulls in the open field with some running room. Assuming it holds up, this is a classic move that signals more upside to come. That is unless, of course, we see another "breakout fakeout" tied to something bad happening across the Atlantic. But for now, the bulls are large and in charge.
We would consider being short-term buyers at: A pullback to test 1285 on S&P 500
We would consider being short-term sellers: A close below 1279 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is clearly positive today. 'Nuf said.
Intermediate-Term Trend: The intermediate-term picture has improved with today's move as we are now seeing a "higher high" put in on the DJIA and S&P charts. In addition, with the ma's all moving higher, it is hard to argue with the trend at this point.
Market Internals: Our TBC models are both still positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Unlike earlier rally tries, this time, the momentum indicators are joining in on the bulls' fun. In short, we believe it to be positive that these models are currently green and displaying some strength.
Support/Resistance Zones for S&P 500:
- Current Support: 1285
- Current Resistance: 1300
Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain very overbought from a short-term view but are only neutral from an intermediate-term perspective.
Investor Sentiment: Our sentiment indicators continue to be contradictory. Thus, the neutral reading of our models makes sense.
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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Excellent read... Time for a short run Bull...