David Moenning - State's Founder and Chief Investment Strategist
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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: June 7
Our Current Take:
Hope is taking it on the chin a bit this morning as Ben Bernanke decided it is best to keep his cards close to the vest at this point (shocking, I know). This is creating a rather ugly technical picture at the present time, but the day is young. Remember, after a big up day, follow-through does not have to happen immediately. We like to see another pop higher within the next three days. However, we must also keep in mind that traders have received two pieces of good news today, so a strong finish would seem to make sense. But then again, with the S&P's open leaving a gap on the charts, the bears may have a target to hit down to 1315. Bottom Line: This environment as this remains a news/rumor-driven market.
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P.S. the Daily Decision made a move yesterday.
We would consider being short-term buyers at: A successful test of support at 1300 or close over 1315
We would consider being short-term sellers: A close below 1305
S&P 500: Intermediate-Term View
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains moderately positive today. However, there is a chance that a range may be developing so watch that 1330 level.
Intermediate-Term Trend: Although things are improving a bit, the intermediate-term trend remains moderately negative at this time.
Market Internals: No change today... Our s.t. TBC model is neutral and our i.t. TBC model is still negative.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Although hope produced the biggest up day of the year; it has done little to impress our momentum models. The bulls need more than a one-day wonder here.
Support/Resistance Zones for S&P 500:
- Current Support: 1300
- Current Resistance: 1330
Early Warning Indicators:
Overbought/Oversold Condition: The s.t. oversold condition has now become a modestly overbought condition. However, the i.t. picture remains moderately oversold. As I've said, the bulls will need to get overbought and stay overbought in order to succeed.
Investor Sentiment: Hope may be the word of the day, but our daily sentiment models continue to point to a large amount of pessimism. With the models at extreme levels, the bull camp has the wind at its back.
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