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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 6, 2010
Current Strategy:
Although the bulls are clearly in control of the ball at the present time, and the Russell and Midcap indices are enjoying a romp to new highs, we do have to recognize that the S&P and DJIA do have some resistance to deal with. Thus, after the recent joyride to the upside, some backing and filling might be in order prior to the continuation of the year-end party.
We'd be Short-term Buyers At: A pullback to test 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: Ditto from Friday: While some digestion of gains would seem to be in order at the present time, the short-term trend remains positive.
Intermediate-Term Trend: The intermediate-term trend indicators remain positive on balance. However, the resistance on the DJIA and S&P 500 are a nagging concern.
Market Internals: Nothing new to report here as both our short- and intermediate-term TBC models are both positive once again this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Not much to say really - our momentum models remain positive on balance.
Support/Resistance Zones for S&P 500:
- Current Support: 1200
- Current Resistance: 1225
Early Warning Indicators:
Overbought/Oversold Condition: The warning flag is flying this morning as stocks are now overbought from a short-term standpoint and intermediate-term indicators have just crossed over into the lower reaches of the overbought zone.
Investor Sentiment: By their nature, sentiment indicators are slow moving. And while the models are not uniformly negative, we will also hoist the yellow flag this morning.
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 exponential ma (purple), 18 day weithged ma (cyan), 10 day weighted ma offset by 2 days (orange), 4 day weighted ma offset 2 periods (dashed blue) and stochastic %K using 14 and %D.
S&P 500:
NASDAQ Composite
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