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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 13, 2010
Current Strategy:
Stocks are higher this morning and pushing the top end of the range. Thus, the key question right now is if the bulls have the firepower to make a run for the border. It appears that the consensus is for this breakout attempt to fail. So, it will be important to watch how the market acts up here.
We would also be remiss if we did not mention the new gap on the S&P and NASDAQ from this morning's open. Therefore, we will want to see if the bears have enough energy to retest that level in the near term.
Bottom Line: Buy the dips.
We'd be Short-term Buyers At: A pullback to 1110 on S&P
We'd be Short-term Sellers At: A close below 1090
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is clearly up and positive. However, resistance could prove problematic.
Intermediate-Term Trend: The intermediate-term trend is improving. But it is important to recognize that the market remains range bound.
Market Internals: Both of our TBC models remain positive this morning - a plus for bulls.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Two of our three momentum models moved to buys this morning. This tells us to buy the dips unless the bears are able to reenter the game in a meaningful way.
Support/Resistance Zones for S&P 500:
- Current Support: 1100-1105
- Current Resistance: 1128
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, this positive is starting to fade.
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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