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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: March 10, 2010
The Trend and Momentum Indicators:
Short-Term Trend: Tough to argue with the charts here - the trend is definitely your friend right now.
Intermediate-Term Trend: It "feels" like traders are on a mission to take out the January highs on the S&P 500. So, we'll be watching the resistance zone closely.
Market Internals: Not surprisingly, our TBC models* both remain in the positive zone again today. It would take some major weakness to change this trend in any meaningful way.
*TBC = Trend-And-Breadth-Confirm Models
Market Momentum: Our price-oriented momentum models are singing a happy tune right now while some of the other models aren't quite as enthusiastic about this move (due to the relative lack of volume). But, the bottom line is the indicators are positive on balance.
Support/Resistance Zones for S&P 500:
- Current Support: 1120-1125
- Current Resistance: 1150
The Early Warning Indicators:
Overbought/Oversold Condition: Stocks are now overbought across the board from a short-term perspective. However, with our intermediate-term indicators stil only neutral, the stars have not aligned for a meaningful decline. (Remember, the best moves occur when the time-frames are "lined up" and singing the same song.)
Investor Sentiment: One of the important things to understand about sentiment indicators is they tend to lag the price action. Thus, it isn't surprising to see some optimism coming into the indicators right about now. However, sentiment is not yet at extreme levels and remains constructive overall.
Current Strategy:
We continue to expect to see some sort of a pullback/pause/consolidation at some point in the near term. However, as they say, the most bullish thing a market can do is go up and make new highs. So, with the Nasdaq, Midcaps, and Smallcaps leading the way, we should probably expect to see the S&P make new-cycle highs shortly. We'd be cautious at this stage and wait for a pullback before adding to positions in the leaders.
We'd be Short-term Buyers At: A successful retest of 1125-30 on S&P 500 or a close above 1150
We'd be Short-term Sellers At: Close below 1120 on S&P 500
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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The analysis provided is based on both
