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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: December 3, 2010
Current Strategy:
With the market having blasted higher two days in a row and the big three indices (DJIA, S&P 500, NASDAQ) now bumping into some overhead resistance, the question of the day becomes: What's next? While looking at chart patterns is clearly a subjective game, we will note that at the end of the corrective phases that have occurred since this bull market began, the market has tended to first blast higher, then pause, and then continue to work higher for a decent length of time. While this time could indeed be different, given the spot on the calendar, we would suggest a buy-the-dip strategy going forward.
We'd be Short-term Buyers At: A pullback to test 1200-1205 or a break over 1226 on S&P 500
We'd be Short-term Sellers At: A close below 1200
Trend and Momentum Indicators:
Short-Term Trend: While some digestion of gains would seem to be in order, the short-term trend remains positive.
Intermediate-Term Trend: The corrective phase appears to have run its course and our intermediate-term trend indicators are positive once again. We'd look for more rally ahead from an int. term perspective.
Market Internals: Ditto from yesterday - Our TBC models are both positive this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models have improved and are now positive on balance. Nothing like a good "blast" higher to move the needle on the momentum gauges.
Support/Resistance Zones for S&P 500:
- Current Support: 1200
- Current Resistance: 1225
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are now overbought from a short-term standpoint but remain high neutral from an intermediate-term point of view.
Investor Sentiment: Nothing new to report here. Our sentiment indicators continue to flash modest warning signs.
Chart Watch:
S&P 500 Last 12 Months
S&P 500 Last 5 Years
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