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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 23, 2010
Current Strategy:
The battle for the breakout continues this morning as the bears were denied entry into the correction zone by the housing and LEI data. After a stellar run, it is clear that the bulls deserve to take a break here. And so far at least, this is looking more like a "pause that refreshes." We'd continue to buy the dips and cut-and-run below 1113.
We'd be Short-term Buyers At: A successful test of 1130 on S&P (so far, so good)
We'd be Short-term Sellers At: A close below 1113
Trend and Momentum Indicators:
Short-Term Trend: The short-term uptrend has stalled and is now neutral. However, we do like the action so far today.
Intermediate-Term Trend: Although a modest pullback is ocurring, the overall trend still looks pretty good at the present time.
Market Internals: Our short-term TBC model did move back to neutral today. However, it wouldn't take much for it to flip back to green.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: The three momentum models remain in pretty decent shape, but are off of their recent highs. This confirms the idea that the uptrend has stalled for the time being.
Support/Resistance Zones for S&P 500:
- Current Support: 1125
- Current Resistance: 1145-50
Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain overbought from both short- and intermediate-term perspectives.
Investor Sentiment: Sentiment continues to get more upbeat, which could become a problem over time. But for now, it is simply something to keep in the back of your mind.
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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