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 25, 2010
The Trend and Momentum Indicators:
Short-Term Trend: This morning's dive has taken the indices back below their s.t. moving averages for the second time in three sessions. We'll have to give the bears the benefit of the doubt in the near-term.
Intermediate-Term Trend: The decline has also pushed the indices back below their intermediate-term moving averages. In short, this is not a good sign.
Market Internals: If the market were to close where it is right now, both of our TBC (trend-and-breadth-confirm) models would turn negative.
Market Momentum: Our momentum models are "models of models" and as such it is hard to make a prediction of how today's movement will impact the models. However, it is a safe bet that we will see some deterioration.
Support/Resistance Zones for S&P 500:
- Current Support: 1080
- Current Resistance: 1100
The Early Warning Indicators:
Overbought/Oversold Condition: Although this morning's decline will relieve some of the overbought condition, it will be a while before an oversold condition can develop.
Investor Sentiment: Our sentiment indicators are not designed to be "hair trigger" oriented, so they remain moderately positive at the present time.
Current Strategy:
Stocks have broken down below the "cluster" of moving averages (10-, 25-, and 50-day are all within a hair of one another at the moment), which is not a good sign from the bulls' persective. However, neither the Dow or the NASDAQ have moved below important support zones, so the bulls do have something to lean on at the moment. We will also note that the dollar/stock linkage is back in a big way today, which may explain the sudden increase in volatility. We're watching the support levels on the NASDAQ and Dow closely.
We'd be Short-term Buyers At: A successful test of 1080 or close above 1100
We'd be Short-term Sellers At: Close below 1080 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 Last Intraday
S&P 500 Last 3 months
S&P 500 Last 12 months
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