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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.

Coming September 1st: The Daily Decision-PRO. We are currently putting the finishing touches on a new Daily Decision service designed for active, sophisticated investors who are able to trade markets on a real-time basis and can accept the risks involved with short-term, swing, and day-trading, as well as options and leveraged ETF's. We hope to have the service available by September 1st. And yes, current Daily Decision subscribers will have access to the service as well as a substantial disount should you want to upgrade to the "PRO." Here's a link to the sumary page: Daily Decision-PRO. We now return you to your regularly scheduled program...

Technical Talk: August 24, 2010

Current Strategy:

The lower reaches of the current trading range are being explored this morning. Thus, the question "how bad is it, really?" may soon be objectively asked by traders and investors alike. But regardless of your view on the macroeconomic outlook, the bottom line is the technical picure ain't so hot right now. The short-term moving averages are below the 50-day again and the 50-day itself has turned down. Thus, it would appear to be bears' ball at the moment. However, we would be remiss if we did not point to the gap open this morning. And as the saying goes, all gaps (on the major indices) are filled - eventually.

We'd be Short-term Buyers At: A close above 1070 on S&P

We'd be Short-term Sellers At: A close below 1050

Trend and Momentum Indicators:

Short-Term Trend: Despite some short-covering at the moment, the short-term trend remains negative.

Intermediate-Term Trend: The intermediate-term trend has weakened but continues to be range-bound and news-driven.

Market Internals: Both of our TBC models are solidly negative and unlikely to improve on a short-term bounceback.

• TBC = Trend-and-Breadth-Confirm Model

Market Momentum: The last of our three momentum models went to a sell yesterday and all three are in negative territory. Thus, traders will want to sell rallies.

Support/Resistance Zones for S&P 500:


• Current Support: 1050ish
  
• Current Resistance: 1070

Early Warning Indicators:

Overbought/Oversold Condition: Ditto from yesterday: The market remains oversold from a short-term perspective but is only neutral from the intermediate-term view.

Investor Sentiment: It is actually surprising to see just how negative the sentiment has become in such a short period of time and on such a small amount of data. Thus, we're of the opinion that the current selling is based primarily on fear of what might happen as opposed to reacting to what actually is happening.

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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