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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: January 14, 2011
Current Strategy:
The slow melt higher continues this morning as money continues to want to "get in" on the U.S. stock market game. The biggest positive from the bulls' perspective is that stocks are actually higher this morning in the face of what was largely bad or uninspiring news. And when stocks go up in the face of "bad" news, the bottom line is bullish. Sure, the market could turn and run lower into the close. After all, it is a Friday in front of a holiday weekend. But so far at least, the action continues to suggest that the bulls be given the benefit of any doubt.
We would consider being short-term buyers at: A pullback to test 1278ish on the S&P 500
We would consider being short-term sellers at: A close below 1259
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is back to positive this morning.
Intermediate-Term Trend: No change (again) - the intermediate-term trend continues to march higher.
Market Internals: Nothing new today. Both of our TBC models remain in positive territory this morning.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models remain positive on balance. And while the bears tried to argue earlier in the week that momentum was waning, the indicators are starting to perk back up again.
Support/Resistance Zones for S&P 500:
- Current Support: 1278
- Current Resistance: 1325
Early Warning Indicators:
Overbought/Oversold Condition: Just about everything is back to being overbought and our intermediate-term indicator is now flashing a warning sign. So, with these indicators now lining up, the bears ought to have an opportunity again in the near-term. (Remember, the best moves in both directions occur when the cycles align.)
Investor Sentiment: Same song, different day. Our sentiment indicators remain overly optimistic and a warning flag.
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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don't fight the tape or the fed or the leading economic indicators seems to be the name of the game currently. Can't buy the dips at present because we haven't had a significant dip in months, BUT one will surely come along before too much longer if history is a guide.