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
Both teams continue to fight for the right to call the next move theirs. The bulls can lay claim to the idea that near-term support has held up so far while the bears will counter with the argument that it wouldn’t take much to break to a new low. And with the long weekend rapidly approaching, we don’t have much conviction either way. Thus, we’ll stay cautious for the time being.
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 1315 on the S&P 500
Trend and Momentum Indicators
Short-Term Trend: While the short-term trend remains negative, the fact that support may be developing is a modest positive.
Intermediate-Term Trend: No change again today… We’re calling this a consolidation phase from an intermediate-term perspective.
Market Internals: Both of our TBC models remain negative again this morning. This serves as a reminder that there has been some technical damage to the tape over the past month.
- TBC = Trend-and-Breadth-Confirm Model
Market Momentum: Two of three of our momentum models have actually ticked back up into the “moderately negative” mode overnight. While this is nothing to cheer about, it is worth noting that the bears do not have complete control at this stage.
Support/Resistance Zones for S&P 500:
- Current Support: 1315
- Current Resistance: 1320ish
Early Warning Indicators
Overbought/Oversold Condition: Ditto from yesterday: The S&P is remains oversold from a short-term perspective and is still neutral from an intermediate-term point of view.
Investor Sentiment: The sentiment indicators are now neutral on balance. We would prefer to see some out-and-out pessimism, but that may be asking a lot right now.
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.