Technical Talk: Will 'The Troops' Follow Their Leaders?
January 17, 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 17, 2012
Our Current Take:
Stocks appear to be "working higher" currently as the bulls have managed to simply shake off the recent negative inputs from Europe (i.e. S&P downgrading everything in sight). While the Dow and S&P (aka "the generals") are clearly leading the way to the upside, the question of the day is if "the troops" (NASDAQ, Midcaps, Smallcaps) will follow along or invoke a mutiny here at the October highs. We will also note that the S&P 500 has spent a great deal of time so far today flirting with 1300. Thus, it would appear that this level may hold the key in the very near term. So, with big meetings in Europe and the earnings parade starting up this week in the U.S., it will be interesting to see if the bulls can keep on keepin' on.
We would consider being short-term buyers at: A close over 1303 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: Today's advance has given short-term trend a nice boost and unless the bears make a big comeback today, the bulls are likely to maintain possession of the ball.
Intermediate-Term Trend: The move to new cycle-highs means the intermediate-term trend is positive. But remember, a break below 1260 would negate the current move.
Market Internals: Our short-term TBC model are both positive this morning. A plus for the bulls.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: All three of our momentum models remain positive again this morning and the internal readings are now positive across the board. While this situation could be quickly erased, the longer these models stay positive, the stronger the uptrend becomes.
Support/Resistance Zones for S&P 500:
- Current Support: 1280
- Current Resistance: 1300
Early Warning Indicators:
Overbought/Oversold Condition: The short-term overbought condition is back and the intermediate-term indicators remain still neutral.
Investor Sentiment: Our sentiment indicators remain conflicted and neutral. However, optimism (in the shorter-term components) is building. But for now, you can read anything you want into this batch of data.
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: 5 day weighted ma moved forward two days (blue dash), 10 day weighted ma offset by 2 days (orange), 18 day weithged ma (cyan), and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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