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
It appears that stocks are in the midst of a consolidation pattern at the present time as traders wrestle with both the macro picture as well as the action in the greenback. On the subject of the dollar, with the chart quickly becoming very overbought, a pullback is to be expected. And, of course, this would likely produce a rally in stocks. So, stay tuned to the buck.
We would consider being short-term buyers at: A close above 1350 area on the S&P 500
We would consider being short-term sellers at: A close below 1335 on the S&P 500
Trend and Momentum Indicators
Short-Term Trend: The short-term trend is now neutral and attempting to consolidate at support.
Intermediate-Term Trend: The intermediate-term trend remains moderately positive and would require a close below 1300 to change the rating.
Market Internals: Our TBC models remain split with the short-term model negative and the intermediate-term model neutral.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Our momentum models continue to sport neutral/lackluster readings and have done a good job in warning of the current consolidation phase.
Support/Resistance Zones for S&P 500:
- Current Support: 1340
- Current Resistance: 1350-70
Early Warning Indicators
Overbought/Oversold Condition: The indices are now neutral from both a short- and intermediate-term standpoint.
Investor Sentiment: Our sentiment indicators are actually improving a bit as some of the froth comes out of the market.
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.