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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 21, 2011
Current Strategy:
With this morning's early rebound having been met with another bout of selling, it appears that it's "game on" between our two teams. Although it has been quite some time since the bears have been in a game, should our furry friends take out yesterday's low in the NASDAQ or the Russell, things could get interesting.
We would consider being short-term buyers at: A close over 1296 on the S&P 500
We would consider being short-term sellers at: A close below 1278
Trend and Momentum Indicators:
Short-Term Trend: The bulls are trying to hang on here, but the short-term trend is currently no better than neutral - especially in the leading indices such as the NASDAQ and Russell 2000.
Intermediate-Term Trend: As we've been saying the intermediate-term trend remains in good shape. But a move below 1260 could change things quickly.
Market Internals: Our short-term TBC model moved to negative yesterday while our intermediate-term model remains positive. So, with the game now on the line, may the best team win.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: As we reminded readers yesterday, our momentum models are intermediate-term in nature. Thus it is worth noting that one of our models is within a whisker of flipping to negative while the other two remain positive on balance.
Support/Resistance Zones for S&P 500:
- Current Support: 1278
- Current Resistance: 1296
Early Warning Indicators:
Overbought/Oversold Condition: The overbought situation is in a state of flux at the moment. The intermediate-term indicators are VERY overbought while the shorter term indicators are neutral.
Investor Sentiment: Nothing new to report. The sentiment indicators remain at extremely high levels. However a rally failure here today could begin to chip away at the upbeat attitude.
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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