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: August 7, 2009
The Trend and Momentum Indicators:
Short-Term Trend: While the bears could make a comeback at any time and for any reason, another new cycle-high this morning means the short-term trend remains positive. However, we'd watch the NASDAQ closely here.
Intermediate-Term Trend: No change today...The intermediate-term trend is clearly positive and would require a "lower low" in order to be downgraded.
Market Internals: Still no change - Both our short-term and intermediate-term trend-and-breadth-confirm models remain positive again today.
Market Momentum: Our momentum indicators continue to find fault with the rally as the "oomph" isn't as strong as we'd like at the moment. However, the models are moderately positive on balance.
The Early Warning Indicators:
Overbought/Oversold Condition: The indices remain maximum overbought on a short-term basis and are modestly overbought on an intermediate-term basis.
Investor Sentiment: Yesterday's message bears repeating... Our daily sentiment indicator has moved to its highest level since the beginning of 2002 and the "market timers" at Rydex now have the most money in "long" funds since late 2004.
Current Strategy:
Obviously, with the Dow and S&P 500 hitting new cycle highs this morning, things are looking good for our heroes in horns. However, we'd be remiss if we failed to point out that the market-leading NASDAQ has been lagging badly over the past week. Shile this could be a sign of a shift in leadership, it could also be an indication that the rally is getting tired. So, this is definitely something to keep an eye on going forward. Our current strategy is to buy the dips - assuming we can get one that lasts more than a day before the rally is over.
We're Short-term Buyers At: A pullback to 992 on S&P
We'd be Short-term Sellers at (or near): A close below 989 on S&P
S&P 500:
NASDAQ Composite
The indicators we have displayed on the chart above include: 100 day exponential moving average (blue), 50 day simple ma (purple), 25 day simple ma (cyan), 10 day simple ma (orange), standard deviation bands using 1.9 std dev of 21 day and stochastic %K using 14 and %D.
S&P 500 Intraday
S&P 500 Last 3 months
S&P 500 Last 6 months
S&P 500 Last 12 months
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