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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: November 9, 2010
Current Strategy:
Although a pullback would seem to make sense right about now (or at just about any other time since the beginning of September), the bears have been completely shut out of the game for some time now. As such, it would be reasonable to assume that the current trend of consolidation patterns being sideways in nature could continue. Therefore, we will be watching to see if the bears will be able to make any hay during what appears to be a "sloppy phase" in the market.
We'd be Short-term Buyers At: A pullback of twoard 1210 on S&P 500
We'd be Short-term Sellers At: A close below 1200
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend appears to be morphing into a consolidation pattern.
Intermediate-Term Trend: Same song, different day... Although stocks are due to pullback, the dips should be bought given the strength of the intermediate-term trend.
Market Internals: Our short-term TBC models are both solidly positive. However, a decent bout of weakness could flip our "hair trigger" model to neutral.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Nothing new to report on this front as of yet. The momentum indicators remain moderately positive.
Support/Resistance Zones for S&P 500:
- Current Support: 1200 - 1210
- Current Resistance: 1240
Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain overbought. However, to date this has been a "good overbought" condition.
Investor Sentiment: We will continue to wave the yellow flag here. However our arms are getting tired.
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: 18 day weighted ma (cyan), 9 day exponential ma (thick orange), 4 day simple ma (broken blue), and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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