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: February 4, 2010
The Trend and Momentum Indicators:
Short-Term Trend: The bulls were turned away from the resistance at 1100 and stocks are now back near the recent lows. We'd stay cautious for the time being.
Intermediate-Term Trend: There is some support here, but it is rather thin. So, we'll watch the action down here as a "tell" about where we head next.
Market Internals: Today's decline will push our short-term TBC (trend-and-breadth confirm) model back to negative. And since the intermediate-term model never got ouf of the red, things aren't in great shape here.
Market Momentum: Our momentum models aren't in bad shape at the moment. But, if we see much more weakness, these models will likely turn red.
Support/Resistance Zones for S&P 500:
- Current Support: 1070
- Current Resistance: 1100 - 1105
The Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain oversold in the short-term. However, if the weakness in the market lasts much longer, this condition will become a sign of strength on the downside instead of a "get ready to go the other way" indicator.
Investor Sentiment: As we've mentioned, our sentiment indicators have improved nicely. However, this situation can persist for some time and there is plenty of room for sentiment to become more negative.
Current Strategy:
After being treated rather rudely at the 1100 resistance, the bulls are now tasked with defending the recent low. So, with 1100 now clearly defined as the top, we'll be looking for the bottom. And with this market being about "credit risk" we'd probably stand aside for now. No need to be a hero here.
We'd be Short-term Buyers At: A close above 1105
We'd be Short-term Sellers At: Close below 1070 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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