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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: March 5, 2010

The Trend and Momentum Indicators:

Short-Term Trend: The indices have blasted off this morning and have once again put some distance between the s.t. moving averages. The move up is a plus, but we are once again concerned about the gap open on the chart of the S&P.

Intermediate-Term Trend: We continue to like the price action from an intermediate-term perspective. But we should point out that there is resistance to deal with on the Dow and S&P 500.

Market Internals: Same song, different day: Our TBC models* both remain 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: Our momentum models have improved with the advance and remain positive on balance at this point.

Support/Resistance Zones for S&P 500:


• Current Support: 1115 - 1120
  
• Current Resistance: 1135 - 1150

The Early Warning Indicators:

Overbought/Oversold Condition: Nothing new to report here. Stocks remain overbought from a short-term perspective. However, as we've been saying, the current overbought condition can also be viewed as a sign of strength.

Investor Sentiment: Sorry to say that there is once again, nothing new to report on the sentiment front. The indicators are starting to show a little more optimism -- but are modestly positive overall.

Current Strategy:

The rally appears to have resumed this morning in response to better-than-expected news on the labor front. And it is certainly positive that many of the indices are either approaching or have surpassed their January highs. But, we would be remiss if we failed to point out that this morning's celebratory move created another gap on the chart of the S&P 500. Thus, a move down to 1123.73 would be expected at some point in the near-term. Should the pullback lack substance, this would present a spot for the bulls to reload.

We'd be Short-term Buyers At: A successful retest of 1115 on S&P 500 or a close above 1150

We'd be Short-term Sellers At: Close below 1114 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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