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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 11, 2010
Current Strategy:
After such a wonderful run higher since late-August, a correction, a pullback, or even a pause in the action is normal. And so far at least, the current pullback appears to be fairly orderly. We're watching the 1204 level today as a short-term line in the sand. Should the bears break through that level, we'd expect to see an almost immediate test of 1200. And if 1200 breaks, the bears will likely take control for a while. But... If the line in the sand holds, then the current rally phase might just continue.
We'd be Short-term Buyers At: Pullbacks toward 1205 - 1200 on S&P 500
We'd be Short-term Sellers At: A close below 1200
Trend and Momentum Indicators:
Short-Term Trend: With prices about where they were at this time yesterday, the song remains the same. While the S&P has broken below its s.t. ma, the 4-day is above the 10-day, which is above the 19-day, which is above the 50-day.
Intermediate-Term Trend: The I.T. trend is up and as such, we will continue to say this is a buy the dips situation for I.T. investors.
Market Internals: Our shorter-term TBC model remains in neutral, but the intermediate-term model is still positive.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models upticked with yesterday's small bounce and remain in good shape.
Support/Resistance Zones for S&P 500:
- Current Support: 1200
- Current Resistance: 1240
Early Warning Indicators:
Overbought/Oversold Condition: The intermediate-term indicators are still quite negative and the short-term overbought condition has yet to be worked off. A warning sign...
Investor Sentiment: Sentiment remains a yellow flag here - but as we've said a time or two, this is a situation that can stay intact for quite some time. The key to these indicators is to wait until they reach an extreme (check) and then reverse...
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 weighted ma (purple), 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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