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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 15, 2010
Current Strategy:
The song remains the same today... We like the action so far as the market has shrugged off the negative news from the Empire Manufacturing report and is once again trying to move higher. However, the key still is the fact that the market is overbought and bumping into resistance. The bears argue that things aren't good enough to warrant a breakout to the upside and of course, the bulls disagree. Thus, we will avoid taking sides here and let the market do the talking here. From a strategy standpoint, we are looking to buy a dip or a breakout.
We'd be Short-term Buyers At: A close over 1130 (with some enthusiasm) on S&P
We'd be Short-term Sellers At: A close below 1108
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains mostly positive. But, the resistance and the overbought condition are creating problems...
Intermediate-Term Trend: Same song, different day... The intermediate-term trend is moderately positive.But, the market remains range bound.
Market Internals: Sorry for the broken record, but both of our TBC models remain positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: All three of our momentum models are now on a buy signal, which is a clear plus. However, none of the readings are particularly robust at this point.
Support/Resistance Zones for S&P 500:
- Current Support: 1100
- Current Resistance: 1129
Early Warning Indicators:
Overbought/Oversold Condition: The market remains overbought on both a short-term and intermediate-term basis. This is a potential problem in the short-term. However if stocks do not pullback soon, we will read this indicator as a sign of strenght. But at this stage, we're still wary of the overbought condition.
Investor Sentiment: As we mentioned yesterday, our sentiment indicators are starting to weaken. While they are by no means negative and currently continue to favor the bulls, we need to be on the lookout for sentiment becoming too optimistic too soon.
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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