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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 30, 2010
Current Strategy:
After Friday's bounce to the upside, some backing-and-filling is normal. This week has an abundance of data due to be released, so it makes sense that traders may want to lock up some profits in front of the deluge of what is expected to be more bad news. The good news is that prices have held up fairly well so far. The bad news is the gap created by Tuesday's open remains unfilled and is now overhead resistance. We'd remain cautious.
We'd be Short-term Buyers At: A close above 1067 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 has been elevated to neutral due to the five days of basing action. However there is resistance overhead.
Intermediate-Term Trend: The 1040 level remains the key to both teams from an intermediate-term standpoint. As we said Friday, if it can hold, we'd become more constructive on the intermediate-term outlook. But if not...
Market Internals: Our short-term TBC model has upticked to neutral and our longer-term breadth model actually flashed a Buy on Friday. However, it is anybody's guess as to whether these signals can hold up.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models have improved only modestly recenly. Thus, there is still some work to do for the bulls.
Support/Resistance Zones for S&P 500:
- Current Support: 1040ish
- Current Resistance: 1070
Early Warning Indicators:
Overbought/Oversold Condition: The market is not quite as oversold as it was from a short-term perspective but is still fairly oversold. The intermediate-term remains neutral.
Investor Sentiment: Sentiment remains fairly negative currently. But in this news-driven environment, the negative sentiment is not helpful when bad news hits the tape...
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), and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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