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 5, 2010

The Trend and Momentum Indicators:

Short-Term Trend: Stocks are searching for a bottom this morning. From a short-term technical standpoint we'd say "good luck with that."

Intermediate-Term Trend: The bulls are trying to hold the line this morning due to this being is an important technical juncture from an intermediate-term perspective. We note that the 25-day is about to cross below the 50-day, which hasn't happened during this bull run so far.

Market Internals: As expected, both of our TBC (trend-and-breadth confirm) models are now in negative territory. So, it's bears' ball.

Market Momentum: Our momentum models are mixed and weakening. The short-term model did a great job warning of the current corrective action and our intermediate-term models are now close to going negative.

Support/Resistance Zones for S&P 500:


• Current Support: 1060(ish)
  
• Current Resistance: 1080

The Early Warning Indicators:

Overbought/Oversold Condition: We'll stick with yesterday's thoughts... Stocks remain oversold in the short-term. However, if the weakness in the market lasts much longer, this condition will become a sign of strength on the downside instead of a "get ready to go the other way" indicator.

Investor Sentiment: The sentiment indicators have improved in the last two weeks. But as we said yesterday, this situation can persist for some time and there is plenty of room for sentiment to become more negative.

Current Strategy:

The rally in the dollar continues to hurt the stock market and in short, there isn't much good we can say about the action. We will note that when the 25dma crosses below a 50dma, a bottom often ensues during long uptrends. And since we believe the current pullback is a "bad news panic" this remains something to watch.

We'd be Short-term Buyers At: A close above 1105

We'd be Short-term Sellers At: Close below 1070 on S&P

S&P 500:

NASDAQ Composite

The indicators we have displayed on the chart above include: 50 day exponential ma (purple), 25 day exponential ma (cyan), 10 day weighted ma offset by 2 days (orange), standard deviation bands using 1.9 std dev of 21 day and stochastic %K using 14 and %D.

   S&P 500 Intraday

   S&P 500 Last 3 months

   S&P 500 Last 6 months

   S&P 500 Last 12 months

 

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