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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 28, 2010
Current Strategy:
It appears that the dip-buyers are back with a vengeance this morning as the decline in response to the weaker-than-expected economic data was quickly reversed by traders. Bottom Line: If the bulls can hold the gains, this has to be considered impressive action. As such, we would expect to see a test of this week's highs in the near term. So, it appears that buying the dips is the current battle cry on Wall Street and at mutual fund shops all over the country.
We'd be Short-term Buyers At: A close above 1149 on S&P
We'd be Short-term Sellers At: A close below 1122
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is now neutral. But again, one has to be impressed with the action so far today.
Intermediate-Term Trend: Ditto from yesterday: The Intermediate-term trend remains in good shape and would remain positive above 1130.
Market Internals: Our short-term TBC model flipped back to neutral yesterday but could easily reverse again today if the bulls can keep adding to gains here.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Market momentum is decent at the present time. However, in all honesty, the HFT activity is making the interpretation of the moves more difficult. For example, a breadth thrust is a rare and very profitable buy signal, which generally only occurs at the beginning of a bull market. However, during this move, we've already seen six such buy signals.
Support/Resistance Zones for S&P 500:
- Current Support: 1125
- Current Resistance: 1150
Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain modestly overbought from a short-term perspective but the condition is not severe as it was.
Investor Sentiment: Market sentiment is mixed at the present time. While the models we use are moderately negative, other models we follow are in the neutral zone. Thus, the bottom line is that sentiment is not at a bull-killing level.
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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