Chalk Talk: If You Can Ignore the News...

By David Moenning

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.

Chalk Talk: June 15

Our Current Take:

Assuming one is able to separate your view of the charts from the news flow, the game is quite simple at the moment. In short, stocks are breaking above resistance this morning and also snapping what appears to be the neckline of a head-and-shoulders bottom formation. So, again, assuming you don't listen to the news or worry about the goings on in the world, it's all good. However, it is important to recognize that this remains a news/rumor driven environment (as yesterday afternoon's action will attest) and thus, it is very difficult to simply ignore the news flow. But pure technicians will give the edge to the bulls here.

We would consider being short-term buyers at: A close over 1335

We would consider being short-term sellers: A close below 1305

S&P 500: Intermediate-Term View

The indicators we display on the charts below include: 5 day weighted ma moved forward two days (blue dash), 10 day weighted ma offset by 2 days (orange), 18 day weighted ma (cyan), 25-day simple (green dashed) and stochastic %K using 14 and %D.

 

Trend and Momentum Indicators:

Short-Term Trend: The short-term trend continues to improve this morning and call it moderately positive for now.

Intermediate-Term Trend: The intermediate-term trend is also on the verge of an upgrade. But we'd like to see a weekly close over 1350 before getting too enthused.

Market Internals: Is this thing on? Sorry but there is no change again today... Our s.t. TBC model is neutral and our i.t. TBC model is still negative. This is an indication of the current conflicted environment.

  • TBC = Trend-and-Breadth-Confirm Model

Market Momentum: We are just starting to see the needle move in our momentum models as two of the four have perked up to neutral. Hardly a reason for celebration though.

Support/Resistance Zones for S&P 500:

  • Current Support: 1305
  • Current Resistance: 1335-40

Early Warning Indicators:

Overbought/Oversold Condition: Stocks are now overbought from a short-term perspective, neutral from an intermediate-term view, and are moderately oversold from longer-term perspective.

Investor Sentiment: Our investor sentiment models continue to favor the bulls at this time as the mood remains moderately negative.