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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 22, 2010
Current Strategy:
Let's see... Is there any other way to say, "The trend is your friend" right about now? Nope, I guess not. So, with the bulls on a roll and the bears missing in action, it appears that our heroes in horns will try to keep on keepin' on into the New Year celebrations. But with that said (and said with tongue firmly implanted in cheek), a pullback of any shape or size would seem intuitive in the near term. But until the bears can find a reason to be, it looks like we're stuck with the daily grind...
We would consider being short-term buyers at: A pullback to test 1240(ish) on S&P 500
We would consider being short-term sellers at: A close below 1232
Trend and Momentum Indicators:
Short-Term Trend: While this will likely fall in the "duh!" category, the short-term trend remains positive this morning.
Intermediate-Term Trend: Not much new to report...The intermediate-term trend remains positive as all the major indices are at new 52-week highs again this morning.
Market Internals: Ditto from yesterday: Our TBC models remain positive.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: NO change again today: Our momentum models remain positive on balance with just one model remaining "moderately positive" - the rest are at max positive levels.
Support/Resistance Zones for S&P 500:
- Current Support: 1240ish
- Current Resistance: 1275ish
Early Warning Indicators:
Overbought/Oversold Condition: It bears repeating that the overbought condition remains intact and that this is now an indication of market strength - at least until the bears come up with a reason to reenter the game.
Investor Sentiment: All eight (yes, there are eight) of our sentiment models are now in a maximum negative position. Thus, sentiment has reached extreme levels. The key now is to wait until these indicators reverse - THIS is when the best sell signals occur. But we aren't there yet.
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 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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