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
In short, the battle for support continues today. The bulls are currently trying to capitalize on a pullback in the dollar and appear to be testing the 1320 zone from below. This is an important technical level as a break back above 1320 would likely bring in short-covering while a failure would embolden the bears. Stay tuned.
We would consider being short-term buyers at: A close above 1325 area on the S&P 500
We would consider being short-term sellers at: A close below 1317 on the S&P 500
Trend and Momentum Indicators
Short-Term Trend: The short-term trend remains negative at the moment. However, if the bulls can get their act together and move above resistance at 1320, stocks could run a ways.
Intermediate-Term Trend: No change today… We’ll continue to call this a consolidation phase from an intermediate-term perspective.
Market Internals: Both of our TBC models remain negative again this morning – a negative.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: All three of our momentum models have now moved into the red zone and are negative. However, since the model readings are just barely negative, things could improve with a little effort from the bull camp.
Support/Resistance Zones for S&P 500:
- Current Support: 1300
- Current Resistance: 1320ish
Early Warning Indicators
Overbought/Oversold Condition: The S&P is remains oversold from a short-term perspective and is still neutral from an intermediate-term point of view.
Investor Sentiment: As expected, the sentiment indicators have improved a bit as the consolidation phase is now long enough for investors to question the outlook. This is a good thing for those leaning long.
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 weighted ma (purple), 18 day weithged ma (cyan), 10 day weighted ma offset by 2 days (orange), 4 day weighted ma offset 2 periods (dashed blue) and stochastic %K using 14 and %D.