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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.
Technical Talk: September 8, 2010
Current Strategy:
Stocks are higher this morning as worries over sovereign debt in general and European banks in particular appear to be receding this morning. However, it should be noted that the bears are not exactly rolling over here and are using the Semiconductors as a vehicle with which to try and produce some angst. We will point to the weakness in CREE as the source of the problem, but it still appears to us that the SOX is the bears' point of attack.
From a chart standpoint, it is a positive that the bulls were able to hold the line yesterday. However, there is resistance to deal with just overhead. So in short, not much has changed as the trading range remains intact.
We'd be Short-term Buyers At: A pullback to 1080-1090 on S&P
We'd be Short-term Sellers At: A close below 1080
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains fairly positive. But we remain wary of a quick reversal on news.
Intermediate-Term Trend: No change from yesterday as the intermediate-term trend is neutral-to-moderately-positive at the present time.
Market Internals: Both of our TBC models remain positive this morning - a positive for bulls.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Nothing new to report as our momentum models remain only neutral at the moment. But this IS in keeping with a rangebound environment.
Support/Resistance Zones for S&P 500:
- Current Support: 1090ish
- Current Resistance: 1105
Early Warning Indicators:
Overbought/Oversold Condition: The market remains overbought on a short-term basis and is neutral from an intermediate-term outlook.
Investor Sentiment: The sentiment indicators continue to favor the bull camp. However, we're on the lookout for an uptick in the overall mood.
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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