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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 12, 2010
The Trend and Momentum Indicators:
Short-Term Trend: A pullback on a Friday after a strong week would not be surprising - or damaging to the short-term trend.
Intermediate-Term Trend: There is some overhead resistance on the charts of the Dow and S&P. However, a look at the NASDAQ, Russell, and Midcaps tells the real story of the market right now.
Market Internals: Not surprisingly, our TBC models* both remain in the positive zone again today.
*TBC = Trend-and-Breadth-Confirm Models
Market Momentum: Our momentum models actually gained some ground overnight and remain positive on balance.
Support/Resistance Zones for S&P 500:
- Current Support: 1140
- Current Resistance: 1150
The Early Warning Indicators:
Overbought/Oversold Condition: By some measures, stocks are now more overbought than at any time during the rally. The bulls will view this as a sign of strength while the bears say that a decline is coming.
Investor Sentiment: Ditto from yesterday: Although the sentiment indicators are beginning to perk up, this is not an outright negative at the present time. But we should note that the indicators are starting to move into the red.
Current Strategy:
We are of the mind that the bears have some "room to roam" on the downside due to the extended nature of the leading indices. In other words, a pullback of 2% - 3% wouldn't have much of an impact. And since most buyers are probably ready to "stand aside" and wait for a pullback, the bears could have some fun - IF they can find a catalyst to get the party started. As this stage we would focus more on the charts of the NASDAQ, Russell, and Midcaps than the Dow and S&P. Finally, we would be buyers of a dip.
We'd be Short-term Buyers At: A successful retest of 1140 on S&P 500 or a close above 1150
We'd be Short-term Sellers At: Close below 1134 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 Intraday
S&P 500 Last 3 months
S&P 500 Last 12 months
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