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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 12, 2010
Current Strategy:
The bears have finally decided to get back in the game today and have broken some key short-term support levels. And given that this is the first real pullback we've seen since the rally began, the question now becomes: How low will it go? Generally speaking a decline of 3% to 5% off the top would make sense here. We will turn cautious here for the near-term but will look to buy the dip in a day or two once the selling runs its course.
We'd be Short-term Buyers At: A close above 1205 on S&P 500
We'd be Short-term Sellers At: A close below 1200
Trend and Momentum Indicators:
Short-Term Trend: Although our 4-day weighted ma remains above the 10-day, it is clear that the short-term trend is down at the moment. Thus, we will be watching for the bulls to try and make a stand at some point in the near-term.
Intermediate-Term Trend: Although today is getting ugly, the I.T. trend remains up.
Market Internals: Our shorter-term TBC model remains in neutral, but the intermediate-term model is still positive. However, today's shellacking could change that if it holds up.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models remain in good shape overall. However, we will be watching to see if the internal momentum can stay positive in the face of a selloff.
Support/Resistance Zones for S&P 500:
- Current Support: 1200
- Current Resistance: 1240
Early Warning Indicators:
Overbought/Oversold Condition: The intermediate-term overbought condition remains intact. However, the short-term overbought condition is now coming off.
Investor Sentiment: As we've been saying, sentiment remains a yellow flag here.
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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Comments
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