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 13, 2009
The Trend and Momentum Indicators:
Short-Term Trend: Stocks are whipping back and forth within a tight range at the present time. So, we'll be watching for a break in either direction. But for now - at this very moment - the trend is moderately positive.
Intermediate-Term Trend: Let's sum up: the trend is up… price is above the short-term and intermedate-term moving averages… both ma's are moving up… and at this moment, the S&P is sitting at a new cycle high. What's not to like?
Market Internals: Our trend-and-breadth-confirm model has moved back to positive. However, the longer the market goes sideways without any real "oomph", the closer we get to a good sell signal.
Market Momentum: We remain concerned about the internal strength of this advance. But, since we hate to be whiners, we'll simply suggest that investors take note of the fact that this remains a modest concern.
The Early Warning Indicators:
Overbought/Oversold Condition: The short-term overbought condition is back - but is not yet at extreme levels.
Investor Sentiment: No change again... The sentiment indicators remains very optimistic, which is a warning sign.
Current Strategy:
Although the screens are green at the moment, this is beginning to look and feel like a replay of the early June period. The current zone is too tight to "ride the range" so we'll be waiting for a break in either direction. So, unless the market can clear the current consolidation zone with some enthusiasm in the next few days, we'll be looking to become more defensive.
We're Short-term Buyers At: A successful test of 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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