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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 24, 2010
Current Strategy:
At the present time, stocks have recouped all of this week's pullback - a good thing from the bulls' perspective. However, I must say that the blast of 180 points seems a bit excessive given the data. But, as they say, it is what it is. This is a takeoff on the old saw "it's not the news but how the market reacts to the news that matters." Thus, unless the bears can get their act together this afternoon, we'll have to say that we're impressed with the move and award the bulls the benefit of the doubt here. (i.e One should buy the dips.)
We'd be Short-term Buyers At: A close above 1145 on S&P
We'd be Short-term Sellers At: A close below 1122
Trend and Momentum Indicators:
Short-Term Trend: The short-term uptrend is positive once again as the S&P, Dow, and NASDAQ have all moved to new highs for this cycle this morning.
Intermediate-Term Trend: As we've been saying, the overall trend still looks pretty good and today's action reinforces that view.
Market Internals: Our short-term TBC model will flip back to positive today. As such, both models will be flashing green.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: We said yesterday that while our three momentum models (which are based on closing values) are in decent shape, they are off of their recent highs. Thus, it will be interesting to see how much the models improve with today's action.
Support/Resistance Zones for S&P 500:
- Current Support: 1125
- Current Resistance: 1145-50
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are once again overbought from a short-term perspective, but are now neutral longer-term.
Investor Sentiment: The sentiment indicators are moderately negative at the present time but not in the extreme danger zone.
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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