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.
Our Current Take
The Greek parliament is set to vote on a new 5-year austerity plan next week. If the vote is passed, we can expect a move to the upside, much like the move earlier this week. However, if the parliament does not pass the vote, things could deteriorate very quickly. While there is still strong support at 1260, the uncertainty caused by a failed vote could send us below this level, which would send the S&P 500 into technical no-man’s land. Luckily, the vote is EXPECTED to pass, so more likely than not 1260 will remain our support. Barring any further deterioration of the situation in Europe or any significantly worse US economic data, 1260 may be our “bottom” for the time being.
We would consider being short-term buyers at: A close above 1287 on the S&P 500
We would consider being short-term sellers at: A close below 1260 on the S&P 500
Trend and Momentum Indicators
Short-Term Trend: Although stocks are down again this morning, we are currently only 1 point higher on the S&P 500 from where we closed 5 sessions ago, and only 2 points higher from the close 10 sessions ago. We’ll go ahead and call the short-term trend neutral.
Intermediate-Term Trend: No change today in the intermediate-term trend. We continue to rate the trend moderately negative, though we may be bottoming out around this level. We would need to see a move back above 1300 before considering an upgrade.
Market Internals: Our TBC models give us a moderately negative rating today.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: No Change today as our momentum models remain negative this morning.
Support/Resistance Zones for S&P 500:
- Current Support: 1260
- Current Resistance: 1280-1300
Early Warning Indicators
Overbought/Oversold Condition: Nothing really new to report this morning. The market remains slightly oversold in the short term (despite a rally early in the week), and oversold in the intermediate term.
Investor Sentiment: Sentiment is negative, which favors the bulls. In essence, this means that those who wanted to sell have likely done so.
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: 150 day weighted ma (light orange), 50 day weighted ma (purple), 18 day weithged ma (cyan), 10 day weighted ma offset by 2 days (orange), 5 day weighted ma offset 2 periods (dashed blue) and stochastic %K using 14 and %D.