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 3, 2010

The Trend and Momentum Indicators:

Short-Term Trend: They say the most bullish thing a market can do is go up. So… it is safe to say that things are looking bullish right now.

Intermediate-Term Trend: The major indices still have some room to roam on the upside before encountering the January highs (watch the 1130 area on the S&P).

Market Internals: Same song, different day: Our TBC models* are now both in the positive zone, where stocks have gained ground at a rate of more than 30% per year historically.

*TBC = Trend-And-Breadth-Confirm Models

Market Momentum: No change: Our momentum models continue to improve and are now positive across the board.

Support/Resistance Zones for S&P 500:


• Current Support: 1110
  
• Current Resistance: 1130

The Early Warning Indicators:

Overbought/Oversold Condition: It bears repeating that while the market is overbought from a short-term perspective (and now neutral from an intermediate-term outlook) the current overbought condition has now been in place long enough that we can view it as a sign of strength.

Investor Sentiment: As we've been saying, the sentiment indicators are starting to show a little more optimism -- but have not become dangerous.

Current Strategy:

There is an awful lot to like about the current romp to the upside. We've seen the major indices slice through short-term resistance zones. We've seen solid improvement in our models, confirming the move. And we're seeing nice leadership from the small- and mid-cap indices, which are currently movin' on up to new cycle highs. However, we must keep in mind that there is a gap on the chart of the S&P, which will be filled at some point.

We'd be Short-term Buyers At: A successful retest of 1115 on S&P 500

We'd be Short-term Sellers At: Close below 1094 on S&P 500

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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