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.
Short-Term Trend: S&P in confirmed downtrend as index broke through short-term support. Test of 752.44 appears likely.
Market Momentum: Both trend and breadth negative . Our all-cap market index needs an advance of 8.6% to return to neutral but the A/D line is within 0.25% of returning to neutral, which would upgrade the indicator to neutral.
Intermediate-Term Trend: Intermediate-Term trend is now negative on S&P 500 after yesterday's break of support.
Overbought/Oversold Condition: Our stochastic indicators have improved after becoming oversold . This moves the overall indicator to Neutral where the market has actually gained ground at a rate of 9.4% per year.
Investor Sentiment: Sentiment Indicators have actually upticked a bit as more traders begin to look for values and a rebound after the recent price action.
The Bottom Line: (From our Daily Decision Model)
The combination of support being broken, the indices becoming oversold, and the pervasive negativity in the press means that we're actually looking for a rebound to begin at any time. Friday's
are usually up days in a bear market and since the move is becoming extended to the downside, the shorts may be concerned about staying short over the weekend (something good could always come
out of Washington relating to the banks) in this environment.
The Current Plan:
We're looking for a catalyst to give the ball to the bulls, if even for a brief rebound. Thus, aggressive traders can nibble here on weakness. Our thinking is that something will have to be
done shortly regarding the banks, which could easily be the catalyst we're looking for.
S&P 500:
S&P 500 Intraday
S&P 500 Last 3 Months
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