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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.
Coming September 1st: The Daily Decision-PRO. We are currently putting the finishing touches on a new Daily Decision service designed for active, sophisticated investors who are able to trade markets on a real-time basis and can accept the risks involved with short-term, swing, and day-trading, as well as options and leveraged ETF's. We hope to have the service available by September 1st. And yes, current Daily Decision subscribers will have access to the service as well as a substantial disount should you want to upgrade to the "PRO." Here's a link to the sumary page: Daily Decision-PRO. We now return you to your regularly scheduled program...
Technical Talk: August 23, 2010
Current Strategy:
Ah summer... the days when traders are at the beach and the boys with their toys may not be first-stringers. But, the sell programs still seem to work. The point is this... The sell programs continue to be tied to bond yields. Bond yields go down - stocks get a sell program. But the reason bond yields are going down is the fact that hedge funds are pouring record amounts of cash into gov't bonds. Makes you shake your head. Anyway... the technical picture hasn't changed much. Stocks appear to be attempting to base, but whether or not the recent support will hold today is up in the air. Bottom line: a range bound market that is driven by news and programs.
We'd be Short-term Buyers At: A close above 1090 on S&P
We'd be Short-term Sellers At: A close below 1070
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains down. Although the bulls are attempting to make some sort of a stand here.
Intermediate-Term Trend: Same song, different day... We continue to see the current intermediate-term trend as range bound.
Market Internals: Both of our TBC models are still negative. However, a bounce higher would do wonders for the short-term model.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Nothing new today. Our momentum models continue to show signs of weakness. As we reported last week, two of the three models are on sell signals at the moment. But it is important to remember that this is a trading range environment.
Support/Resistance Zones for S&P 500:
- Current Support: 1070 - 1060
- Current Resistance: 1100
Early Warning Indicators:
Overbought/Oversold Condition: The market remains oversold from a short-term perspective but is only neutral from the intermediate-term view.
Investor Sentiment: Sentiment continues to be dour as everyone is now fixated on the double-dip scenario. As we've been saying, this will be a positive if the bulls can find a piece of good news to work with.
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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