Technical Talk: Bears Putting Up a Fight, But Bulls Demand Respect
February 14, 2011
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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: February 14, 2011
Current Strategy:
The action is a little sloppy this morning as the battle between the two teams is a little closer than usual. The bottom line here is simple: While a pullback is to be expected, we'd continue to give the bulls the benefit of the doubt as this is one of those rare uptrends that demands respect.
We would consider being short-term buyers at: A pullback to test 1308 or close over 1330 on the S&P 500
We would consider being short-term sellers at: A close below 1305
Trend and Momentum Indicators:
Short-Term Trend: The short-term trend remains up but the bears appear to be putting up a bit of a fight this morning.
Intermediate-Term Trend: Ditto from Friday: Although we wouldn't be surprised to see a pullback in the near-term, the intermediate-term trend remains positive.
Market Internals: Our TBC models remain positive. And when trend and breadth are in gear, good things tend to happen for the bulls.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: There is good news for the bull camp this morning on the momentum fron as another of our models moved up in the max-positive mode, while the remaining model is only a hair away from flipping positive as well. While we'd like to see all three models running at high levels, the improvement is a plus for the bullishly inclined.
Support/Resistance Zones for S&P 500:
- Current Support: 1305ish
- Current Resistance: 1330
Early Warning Indicators:
Overbought/Oversold Condition: Stocks are once again becoming very overbought. Eventually this will matter. However, the bears will likely need a catalyst.
Investor Sentiment: Nothing new to report. Our sentiment models remain elevated and continue to remind us that some caution is warranted from a big-picture standpoint.
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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