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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.
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Technical Talk: February 1, 2012
Our Current Take:
Stocks are up nicely this morning, which probably makes anyone long feel pretty good. However, before we uncork the champagne on the idea that the bulls are embarking on another leg higher, we should note that there is some overhead resistance right here at 1325. It isn't much, but with the Jobs report looming on Friday, it might be enough to keep traders from making further commitments today. However, a meaningful break above 1327 and a decent jobs report could lead to a swift test of 1350.
We would consider being short-term buyers at: A close above 1327 on S&P 500
We would consider being short-term sellers: A close below 1305 on the S&P 500
Trend and Momentum Indicators:
Short-Term Trend: After eight days of sideways action, the short-term trend has turned moderately positive again today as our s.t. ma's are moving higher again.
Intermediate-Term Trend: This one is simple: With price above the moving averages, which themselves are moving higher, the intermediate-term trend remains positive at this stage.
Market Internals: Our TBC models are both positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models remain mixed (but moderately positive) today. It will be important to see if these indicators can uptick with today's action.
Support/Resistance Zones for S&P 500:
- Current Support: 1300
- Current Resistance: 1350ish
Early Warning Indicators:
Overbought/Oversold Condition: Just like that, the short-term overbought condition is back. And the fact that the market has been unable to reach an oversold condition must be viewed as a bullish condition at this stage of the game.
Investor Sentiment: Still no change new to report... Our sentiment indicators are mixed and only modestly 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: 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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