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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 29, 2010
Current Strategy:
There is no denying that today's tape is ugly. However, the key takeaway is that the decline is a third test of the intraday lows at 1040. So, the game here is simple: Hold above 1040 and the chances for a rebound grow but close below 1040 (especially if meaningfully below) and the bears will be "large and in charge."
We'd be Short-term Buyers At: Successful test of 1040 or close above 1090 on S&P 500
We'd be Short-term Sellers At: Close below 1040
Trend and Momentum Indicators:
Short-Term Trend: Not much good can be said of the short-term trend at this stage... It's down. (But, we will note the big gap down on the NASDAQ, which has the potential to be "filled" in the near-term if the bulls can hold their ground.)
Intermediate-Term Trend: As for the intermediate-term trend, the good news is that the indices are now into a support zone. So, unless the HFT boys kill it at the end, the bulls might have a chance to rebound soon.
Market Internals: Both of our TBC models are soundly negative this morning and serve as confirmation of the downtrend.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models are now negative on balance.
Support/Resistance Zones for S&P 500:
- Current Support: 1040
- Current Resistance: 1070-1090
Early Warning Indicators:
Overbought/Oversold Condition: Ditto from yesterday: Stocks are now oversold from both a short- and intermediate-term perspective.
Investor Sentiment: No change again today: Sentiment remains negative (which will eventually be a positive).
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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