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: February 27, 2009
Short-Term Trend: This morning's breakdown reverses all the warm fuzzies that we had earlier in the week. We will now need to see the S&P break back above the old support to consider an upgrade to neutral.
Market Internals: Momentum clearly favors the bears at this stage. There is nothing positive in our momentum indicators with the possible exception of some positive divergences between price and new lows and the a/d line.
Intermediate-Term Trend: The trend is most definitely not the bulls' friend right now. We will need to see some sort of a thrust to the upside to break the negative feedback loop that is taking place.
Overbought/Oversold Condition: The market remains modestly oversold. However, the bears remind us that markets can stay oversold for quite some time.
Investor Sentiment: No change in Sentiment. Indicators remains negative and near the lows, which will be a positive - eventually.
Current Strategy:
These are the times that try mens' souls... or at least your sanity from a trading perspective! Everything appears to point toward lower prices and there is absolutely no reason to remain optimistic. However, this is EXACTLY how bottoms are made. I'm not suggesting this is the bottom right here and now. But, I can say that this the type of environment of which bottoms are made. So, we're watching the action carefully and getting ready to buy for an intermediate-term move.
S&P 500:
S&P 500 Intraday
S&P 500 Last 3 Months
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