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
Short-Term Trend: Downtrend and bottoming process continues. While it is a slim hope, bulls will be watching the intraday lows of 11/21 at 741.02 for support.
Market Momentum: Nothing new here. Both trend and breadth indicators are negative and volume has increased during the recent plunge . The all-cap market index now needs to advance 13.9% to return to neutral but the A/D line is within 0.28% of returning to neutral, which would upgrade the indicator to neutral. Note that the A/D line continues to hang tough, which can be considered a positive divergence once the selling ends.
Intermediate-Term Trend: Intermediate-Term trend negative on S&P 500 and will need to put in a "higher low" or break above 857.35 before we can consider the trend anything more than neutral.
Overbought/Oversold Condition: The market remains very oversold on balance and both the short-term and intermediate term indicators are "lined up" in oversold territory, which is a prerequisite for a playable rally. However, the intermediate-term indicators are not as oversold as they were in October/November.
Investor Sentiment: The news lows in the indices have not been matched by new lows in the sentiment readings.
Our Current Plan:
The current environment is exceptionally tough to navigate so if you don't have to play, it might be best to sit things out for a while. Those interested in trying to catch the falling knife may do so on a retest of yesterday's low or the 11/21 low on the S&P. The NASDAQ continues to hold up better than the blue chip indices. Momentum buyers should wait for a break above yesterday's high. In short, things are set up nicely for a bounce, but we will need to see a trigger materialize.
S&P 500:
S&P 500 Intraday
S&P 500 Last 3 Months
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