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: March 1, 2010

The Trend and Momentum Indicators:

Short-Term Trend: Stocks have moved to new highs for the current short-term cycle - clearly a positive.

Intermediate-Term Trend: If the indices can continue to put some distance between the cluster of moving averages currently sitting at about 1100 on S&P 500, we could see the bulls attempt a retest of the January highs.

Market Internals: Our TBC* models have some room to improve yet, and will likely do so today assuming the current move can hold up into the close.

*TBC = Trend-And-Breadth-Confirm Models

Market Momentum: Our momentum models continue with modestly positive readings across the board - but there is room for improvement.

Support/Resistance Zones for S&P 500:


• Current Support: 1100
  
• Current Resistance: 1120

The Early Warning Indicators:

Overbought/Oversold Condition: The market is overbought from a short-term perspective but oversold from an intermediate-term outlook. If the bulls can maintain possession of the ball for a while longer, the overbought condition will be viewed as a sign of strength as opposed to a warning.

Investor Sentiment: The sentiment indicators are starting to show a little more optimism but are nowhere near bull-killer levels.

Current Strategy:

Assuming it can hold up today, the break above recent resistance is a clear-cut positive from a chart standpoint. We will note that the DJIA is lagging behind the S&P and NASDAQ today, but there is still plenty of time for this situation to rectify itself. Thus, we will continue to give the bulls the benefit of any doubt and resume a "buy the dip" strategy.

We'd be Short-term Buyers At: A close above 1108

We'd be Short-term Sellers At: Close below 1085 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 Last Intraday

                       S&P 500 Last 3 months

                       S&P 500 Last 12 months

 

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