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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 19, 2011
Current Strategy:
Although the current uptrend has defied the odds (and anyone interested in the short side of the game), the fact that things have been SO universally one-dimensional means that when (not if, but when) the bears do finally get something going, every trader-type in the game is likely to jump on the bear bandwagon - in a hurry. So, in terms of short-term strategy, it might be time to implement an oldie but a goodie: Panic early or not at all.
We would consider being short-term buyers at: A pullback to test 1278ish or a close over 1296 on the S&P 500
We would consider being short-term sellers at: A close below 1277
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend is up for grabs at the moment as the bears are putting their best foot forward at the moment. Watch key support at 1278 for clues as to whether our furry friends can keep things going.
Intermediate-Term Trend: Although a pullback is likely, the intermediate-term trend indicators remain strong.
Market Internals: Assuming the bears can keep a lid on any dip-buying from here, our short-term TBC model will likely flip to neutral. While not a death knell, it would be the first chink in the bulls' armor.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: After moving to max-positive mode yesterday, Our momentum models have downticked a little this morning. This simply tells us that the bulls may need to take a break here.
Support/Resistance Zones for S&P 500:
- Current Support: 1278
- Current Resistance: 1305
Early Warning Indicators:
Overbought/Oversold Condition: Nothing new to report: Stocks remain overbought and vulnerable in the near-term. But from an intermediate-term perspective, this remains a "good overbought" condition.
Investor Sentiment: While the sentiment indicators have pulled back ever-so slightly this week, they also remain at extreme levels.
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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