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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.
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Technical Talk: August 25, 2010
Current Strategy:
With the intraday low touching 1040, it appears that traders have decided to lock in some gains on the short side. And while the bounce up off of the low is encouraging, it DOES need to last a while. Thus, it will be important to see if the sellers start to pile on again as the day progresses. The key technical point today is the "tag" of 1040 as that was the intraday low of May and early-June. If this holds, the bears may lay low for a while and let the bulls enjoy a bounce. But if not...
We'd be Short-term Buyers At: A close above 1051 on S&P
We'd be Short-term Sellers At: A close below 1040
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains quite negative - but is indeed due for a bounce.
Intermediate-Term Trend: The intermediate-term trend has weakened further but is merely at the bottom of the range at the moment.
Market Internals: Same as yesterday (and the day before) Both of our TBC models are solidly negative and unlikely to improve on a short-term bounceback.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models are uniformly negative at the moment. Thus, the bulls would need a bounce with some "oomph" behind it in order to make a dent in the bearish trend.
Support/Resistance Zones for S&P 500:
- Current Support: 1040ish
- Current Resistance: 1060
Early Warning Indicators:
Overbought/Oversold Condition: The market is very oversold from a short-term perspective and is "getting there" from the intermediate-term view.
Investor Sentiment: Our sentiment indicators tend to be laggards. However, they are quickly reflecting the prevailing gosh-awful mood of the market.
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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