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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 17, 2010
Current Strategy:
After the type of bounce higher such as we've seen over the past 9 sessions, a pullback is to be expected. So, this morning's spate of bad economic news has put the bears back in control. However, there are key technical areas up for grabs today, so the bulls appear to be attempting to defend their turf. We'd be dip buyers unless recent support at 1103 breaks.
We'd be Short-term Buyers At: A close above 1115 on S&P 500
We'd be Short-term Sellers At: Close below 1103
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains moderately positive as the 10-day moving average is down at 1095. Thus, the bulls have some room for a little backing-and-filling action.
Intermediate-Term Trend: No change... the intermediate-term trend remains down - but is showing signs of improvement.
Market Internals: Both of our TBC models remain in positive territory. However, a decent pullback would put both at risk. So, we're watching closely.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: The momentum models remain in good shape this morning. But, since these are closing-basis models, the jury is still out on what, if any, damage will be inflicted today.
Support/Resistance Zones for S&P 500:
- Current Support: 1105
- Current Resistance: 1115
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are overbought from a shorter-term perspective. However, as we've been saying, stocks remain oversold in the intermediate-term time frame.
Investor Sentiment: No real change in Sentiment today. Although we are starting to see some optimism creep in, these indicators continue 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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