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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: June 16, 2010
Current Strategy:
Given the bad news environment the market has been engulfed in for nearly two months, it would not have been surprising to see the bears hit the bulls right between the eyes this morning and send stocks plunging back from whence they came. However, it is definitely encouraging to see the bulls putting up a fight to defend their hard-earned turf. So far at least, we'll give the bulls the nod in this round. We'd be dip buyers for now.
We'd be Short-term Buyers At: A close above 1115 on S&P 500
We'd be Short-term Sellers At: Close below 1089
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is holding up well this morning. Advantage bulls (as of this writing)
Intermediate-Term Trend: The bulls still have some work to do if they want to recapture the 50-day moving average (currently sitting at 1142), but the trend indicators are improving at the present time.
Market Internals: Both of our TBC models moved up into the positive zone yesterday, which has led to gains in the market in excess of 30% per year.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: The momentum models are improving nicely. However, we will need to see the current readings hang around a while before we can breathe a sigh of relief.
Support/Resistance Zones for S&P 500:
- Current Support: 1105
- Current Resistance: 1115
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are becoming overbought from a shorter-term perspective. However, this is not necessarily a negative at this point.
Investor Sentiment: Sentiment remains negative on balance, but we are starting to see some optimism creep in. Overall, this area continues to favor the bulls.
Chart Watch:
Below are snapshots of the two main charts we watch closely each day from a technical perspective. The indicators we display on the charts below include: 50 day simple ma (purple), 25 day weighted ma (cyan), 10 day exponential ma (thick orange), 200 day simple ma (thin orange), standard deviation bands using 1.9 std dev of 21 day and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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