Technical Talk: Watching the Important Support Levels
June 24, 2010
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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: June 24, 2010
Current Strategy:
After four moves down, the bulls are probably due to make a comeback at some point soon. However, there has been a fair amount of technical damage done so the bears are probably feeling good about themselves. For now, the trend is down and we'd prefer to watch from the sidelines. However, there is a fair amount of important support just below - something to pay close attention to.
We'd be Short-term Buyers At: A close above 1105 on S&P 500
We'd be Short-term Sellers At: Close below 1074
Trend and Momentum Indicators:
- TBC = Trend-and-Breadth-Confirm Model
- Current Support: 1070
- Current Resistance: 1090
Short-Term Trend: The short-term trend remains negative. We'll want to watch how any rally attempts are treated going forward. If traders continue to sell the rallies, we may be in for a long summer.
Intermediate-Term Trend: The intermediate-term trend is moderately negative. A break below support would turn the trend completely negative.
Market Internals: The internals of the market are not healthy from a short-term perspective and the longer term indicators are fading fast.
Market Momentum: Market momentum favors the bears at this stage. We will be watching the strength of the inevitable bounce to determine the true health of the market.
Support/Resistance Zones for S&P 500:
Early Warning Indicators:
Overbought/Oversold Condition: Unfortunatley, the S&P is not yet oversold on a short-term basis - currently just neutral.
Investor Sentiment: Sentiment remains one of the few plusses the bulls can point to at this time.
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 simple ma (purple), 25 day weighted ma (cyan), 10 day exponential ma (thick orange), 200 day simple ma (thin orange), standard deviation bands using 1.9 std dev of 21 day and stochastic %K using 14 and %D.
S&P 500: 
NASDAQ Composite 
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