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 11, 2009
The Trend and Momentum Indicators:
Short-Term Trend: While the day is young, it appears that the short-term trend may be stalling out. So, we're downgrading our rating and will call things no better than neutral from a s.t. perspective.
Intermediate-Term Trend: Although we could see a pullback at any time, the intermediate-term trend remains positive. A break below 992 would turn the trend to neutral in our view.
Market Internals: While we will expect any weakness to change our "hair trigger" Trend and breadth model, for now, both systems remain positive.
Market Momentum: Our momentum models weakened a little yesterday and are likely to lose some more ground today. But, so far, no sell signals have been triggered.
The Early Warning Indicators:
Overbought/Oversold Condition: The indices remain overbought on a short-term basis. However, as we mentioned yesterday, the extreme overbought condition is starting to work its way off.
Investor Sentiment: The optimism in our sentiment indicators remains strong. As we mentioned yesterday, what we're looking for here is for these indicators to reach an extreme position (check) and then reverse, which would be a sell signal worth acting on from an intermediate-term basis.
Current Strategy:
It would appear that the lack of data inputs is giving the bears an opening this morning and so far at least, they appear to be making some headway. However, the dip buyers have been very active lately, so we will want to see how this session unfolds. We'd continue to play the "buy the dip" game here with the understanding that the bears are overdue for a day or two in th sun. And finally, we're continuing to watch the NASDAQ carefully as it approaches a technical breakdown.
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: 50 day exponential ma (purple), 25 day exponential ma (cyan), 10 day weighted ma offset by 2 days (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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