ONE-TWENTY TWO - A collection of personal articles on financial markets including analysis you can use
Sep
4

T2108 Update (September 3, 2015) – Stock Market Trades to the Edge of A Breakthrough

written by Dr. Duru
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(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are likely to reverse. To learn more about it, see my T2108 Resource Page. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag. T2108-related trades and other trades are occasionally posted on twitter using the #120trade hashtag. T2107 measures the percentage of stocks trading above their respective 200DMAs)

T2108 Status: 16.7% (intraday high of 19.99% – seriosuly!)
T2107 Status: 21.8%
VIX Status: 25.6
General (Short-term) Trading Call: Bullish
Active T2108 periods: Day #10 below 20% (oversold), Day #11 under 30%, Day #34 under 40%, Day #74 under 50%, Day #91 under 60%, Day #289 under 70%

Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or SPY
SDS (ProShares UltraShort S&P500)
U.S. Dollar Index (volatility index)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).

Commentary
The upcoming and much-anticipated U.S. jobs report could completely alter the technical landscape, so I am keeping this T2108 Update short and sweet. (I know – finally!).

T2108 closed at 16.7% for a 10th straight day in oversold territory. Of 66 oversold periods since 1986, only 11 (17%) have lasted longer.


The majority of oversold periods last one or two days

The majority of oversold periods last one or two days


Given this stretch of time, it is only natural that T2108 continues to make moves to breakout and end the oversold period. Today, T2108 traded as high as 19.99% which is .01 percentage point away rom the oversold threshold – I just cannot make this stuff up.


T2108 knocks on the exit gate of a historic oversold period

T2108 knocks on the exit gate of a historic oversold period


T2107, the percentage of stocks trading above their 200-day moving averages (DMAs), also rose right to an important exit gate: a higher high that could have started an uptrend from recent lows.


T2107 ALMOST punches out a higher high that could have confirmed the choppy rise from recent lows.

T2107 ALMOST punches out a higher high that could have confirmed the choppy rise from recent lows.


At least the volatility index, the VIX, followed through on the topping action I pointed out in the last T2108 Update.


The volatility index, the VIX, is now notably losing momentum as two topping patterns have received confirmation.

The volatility index, the VIX, is now notably losing momentum as two topping patterns have received confirmation.


Note that the VIX remains elevated, so traders should continue to expect choppy markets. I am still expecting the VIX to remain elevated, say above 20, going into the Federal Reserve’s rate decision on September 17.

Finally, the United States Oil Fund (USO) made another attempt to break from resistance defined by the downward sloping 50DMA. Another decline in its volatility measure, the CBOE Crude Oil Volatility Index (OVX), increases the odds that the breakout will happen soon. My question: are higher oil prices good or bad for a fragile global economy…?


The United States Oil Fund (USO) attempts to break out from its downtrend now defined by the 50DMA

The United States Oil Fund (USO) attempts to break out from its downtrend now defined by the 50DMA


Given elevated volatility and lots of hand-wringing over what the Fed will do this month, I expect a major battle of interpretations in the wake of the U.S. jobs report…no matter what the numbers say. I fully expect Friday’s post-jobs trading to represent a microcosm of the larger day-to-day chop of this oversold period. With a long weekend ahead, those with short-term profits will likely look to lock those in. Those who continue to fear what the future holds will likely look to bail at an opportune time to stay “safe” over the extended time away from the market.


Daily T2108 vs the S&P 500

Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)


Weekly T2108
Weekly T2108
*All charts created using
freestockcharts.com unless otherwise stated

The charts above are the my LATEST updates independent of the date of this given T2108 post. For my latest T2108 post click here.

Related links:
The T2108 Resource Page
Expanded daily chart of T2108 versus the S&P 500
Expanded weekly chart of T2108

Be careful out there!

Full disclosure: long SVXY shares, long SSO shares and call options, short USO call spread, short USO put options

Sep
3

Turkish Lira Poised For More Weakness As September Fed Rate Decision Looms

written by Dr. Duru
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The trade on the blow-off top on USD/TRY, the U.S. dollar versus the Turkish lira, turned out to be short-lived. Now, the lira looks poised for a lot more weakness. USD/TRY never cracked the low of the day from the blow-off top, and now it is starting into a new uptrend.


The U.S. dollar quickly bottomed out after a blow-off top when Turkey announced its failure to form a government

The U.S. dollar quickly bottomed out after a blow-off top when Turkey announced its failure to form a government


Source: FreeStockCharts.com

Last week, the Turkish central bank raised its reserve ratio in an attempt to stabilize the Turkish lira. The bank applies this reserve ratio on the short-term currency borrowings of lenders. The bank then hopes it will encourage these lenders to do more long-term borrowing which presumably helps to reduce volatility in the lira. The first big test may come later this month when the U.S. Federal Reserve announces its decision on monetary policy on September 17, 2015. While the odds of a September hike are very low (27.4% at the time of writing), the anticipation remains high for this meeting based on the chatter and headlines I see. No matter the decision, the market will likely react sharply as it wrestles with a mix of trepidation, disappointment, and relief. Any moves that are dollar-positive are likely to hurt the currencies of emerging markets the most…like the Turkish lira.

I am likely going to reposition myself long USD/TRY after Friday’s U.S. jobs report (September 4, 2015). I am hoping for a dip to buy and then ride the lira lower into the anticipation of the Fed meeting (and fears of China).

Be careful out there!

Full disclosure: no positions

Sep
3

T2108 Update (September 2, 2015) – Topping Action for Volatility

written by Dr. Duru
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(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are likely to reverse. To learn more about it, see my T2108 Resource Page. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag. T2108-related trades and other trades are occasionally posted on twitter using the #120trade hashtag. T2107 measures the percentage of stocks trading above their respective 200DMAs)

T2108 Status: 15.2% (jump of 27.3%)
T2107 Status: 20.8%
VIX Status: 26.1 (down 16.9%)
General (Short-term) Trading Call: Bullish
Active T2108 periods: Day #9 below 20% (oversold), Day #10 under 30%, Day #33 under 40%, Day #73 under 50%, Day #90 under 60%, Day #288 under 70%

Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or SPY
SDS (ProShares UltraShort S&P500)
U.S. Dollar Index (volatility index)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).

Commentary
I am writing this T2108 Update with a HEAVY dose of tentativeness. Just yesterday, sellers were able to extend this oversold period into historic territory, so I can only talk about bullish signs with a salt shaker on the table. While T2108 is once again within a stone’s throw of ending this oversold period with its close at 15.2%, I am very cognizant of the possibility for more churn ahead that could include a rapid return to oversold conditions.

On Wednesday, September 2, 2015, at least two measures of volatility printed what I interpret as major and important topping patterns.

The volatility index, the VIX, dropped out of the dangerzone. This second time left behind a clear topping pattern known as a spinning top; one could even call it an abandoned baby top. In this pattern, folks who chased volatility higher suddenly found themselves with instant losses the very next day. The pressure is now on them to decide whether to wait for a new surge or to bail quickly and limit losses.


The volatility index drops out of the dangerzone for the second time in this oversold period.

The volatility index drops out of the dangerzone for the second time in this oversold period.



The ProShares Ultra VIX Short-Term Futures (UVXY) breaks down below its 200DMA and adds to my sense of a top in volatility

The ProShares Ultra VIX Short-Term Futures (UVXY) breaks down below its 200DMA and adds to my sense of a top in volatility


Less aggressive traders once again get the green light to start making T2108 oversold trades (buys). While this is still a tough time to buy given the S&P 500 (SPY) printed its own topping pattern after a 2-day rally, at least the index is trading below where it stood when the VIX last fell out of the dangerzone (last Thursday and Friday, August 27th and 28th). This discount could come in handy for enhancing profits on the way back up. Less aggressive traders should be prepared to stop out of new positions on a new low for the S&P 500.


The S&P 500 (SPY) rallies in an attempt to print a higher low and the beginnings of a bottoming pattern.

The S&P 500 (SPY) rallies in an attempt to print a higher low and the beginnings of a bottoming pattern.


Sandwiched between the topping patterns of the VIX and the S&P 500 is the potential for a LOT more churn. While the S&P 500 is a tough call here for new entries, I am liking a fade of volatility more and more. I think there are three main catalysts ahead which could be powerful enough to force resolution of the tension: the monetary policy decision from the European Central Bank (ECB) on the morning of September 3rd, the U.S. jobs report on Friday the 4th, and, of course, the rate decision from the U.S. Federal Reserve on September 17th.

The second, and potentially even MORE interesting, topping pattern for volatility comes from the oil patch. The CBOE Crude Oil Volatility Index (OVX), a volatility measure based on the United States Oil ETF (USO), soared as much as 29% before completely fading and ending the day DOWN 6.5%. At its high, OVX made a new intraday high for the year. The end result was a potentially major blow-off top. This means the most fearful players in the market who were bidding up the price of protection may have finally exhausted themselves.


The CBOE Crude Oil Volatility Index fades hard off a major high to close down for the day.

The CBOE Crude Oil Volatility Index fades hard off a major high to close down for the day.


I have successfully used OVX to signal some key oil-related trades (and I wish I had used it MORE consistently!), so this major move made me sit up straight. I believe the message now is that the United States Oil ETF (USO) will finally start to calm down. After USO made its incredible V-bottom, I projected a 50% retracement of those gains. USO bounced nearly perfectly off that 50% point. The subsequent intra-day rally accompanied a major taming of volatility. Unfortunately, I was not prepared to jump at the bounce from the 50% retracement level.


The United States Oil ETF (USO)  looks ready to wrestle again with stiff resistance at the 50DMA downtrend line

The United States Oil ETF (USO) looks ready to wrestle again with stiff resistance at the 50DMA downtrend line


Despite the topping patterns in volatility, today was another generally quiet day for trades. It FELT like a day I should be doing SOMETHING, but I greatly resisted the temptation to venture far off my T2108 trading results to, effectively, take random shots at a few select buying opportunities. USO was a huge exception.

Finally, the Australian dollar (FXA) continues to cling to 3-year lows against the Japanese yen (FXY). My favorite currency indicator is warning me that any kind of stock market bottom must be considered tenuous until it proves itself. “Proof” could come from a major breakout of the S&P 500 from its most immediate topping pattern.


The Australian dollar clings to lows against the Japanese yen

The Australian dollar clings to lows against the Japanese yen



Daily T2108 vs the S&P 500

Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)


Weekly T2108
Weekly T2108
*All charts created using
freestockcharts.com unless otherwise stated

The charts above are the my LATEST updates independent of the date of this given T2108 post. For my latest T2108 post click here.

Related links:
The T2108 Resource Page
Expanded daily chart of T2108 versus the S&P 500
Expanded weekly chart of T2108

Be careful out there!

Full disclosure: long SVXY shares, long SSO shares and call options, short USO call spread, short USO put options

Sep
2

T2108 Update (September 1, 2015) – Stock Market Sellers Boldly Press Into A Now Historic Oversold Period

written by Dr. Duru
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(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are likely to reverse. To learn more about it, see my T2108 Resource Page. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag. T2108-related trades and other trades are occasionally posted on twitter using the #120trade hashtag. T2107 measures the percentage of stocks trading above their respective 200DMAs)

T2108 Status: 11.9% (a plunge of 38%)
T2107 Status: 17.7%
VIX Status: 31.4 (up 10.4%)
General (Short-term) Trading Call: Bullish
Active T2108 periods: Day #8 below 20% (oversold), Day #9 under 30%, Day #32 under 40%, Day #72 under 50%, Day #89 under 60%, Day #287 under 70%

Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or SPY
SDS (ProShares UltraShort S&P500)
U.S. Dollar Index (volatility index)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).

Commentary
T2108 took a fresh plunge that promises to extend this oversold period into the history books. T2108 plunged to 11.9% from 19.1% and marked an 8th straight day in oversold territory. Of the 66 oversold periods that have occurred from 1986 to 2014, only 14 (21%) have lasted over 8 days. The last oversold period that lasted at least as long as the current one was the 17-day stomach-churner in August, 2011 that was part of the debt ceiling madness.


The majority of oversold periods last one or two days

The majority of oversold periods last one or two days


The chart above shows that 39 (59%) of all oversold periods last just one or two days. This skewed distribution is part of what makes the T2108 trading strategy work (and the variants I have developed since the original development of the strategy). Once the oversold duration gets as long as the current one, managing drawdowns become a more important component of the strategy. Risk management comes into play by watching VIX thresholds. For example, to start this week, I advised less aggressive traders to put buying plans aside given the VIX had returned to the “dangerzone.” With today’s (September 1, 2015) selling on the S&P 500 (SPY) for a 3.0% loss, the VIX moved deeper into the dangerzone.


The S&P 500 has confirmed a short-term topping pattern with a second day of selling that accelerated a fresh downdraft

The S&P 500 has confirmed a short-term topping pattern with a second day of selling that accelerated a fresh downdraft


The volatility index refreshes itself and looks poised to make a new run upward.

The volatility index refreshes itself and looks poised to make a new run upward.


As I noted in the last T2108 Update, the VIX’s move higher off the low from the day with the last big surge implies that even lower levels on the S&P 500 are ahead. The persistent elevation of the VIX means that the stock market should continue to experience large swings up AND down along the way.

If this news is not bad enough, then note the topping pattern on the S&P 500 which compounds the significant breakdown from the earlier 50DMA pivot and 200DMA support. The “small-body doji” from last Friday represents a stalemate between buyers and sellers. The selling on Monday tip the advantage to sellers. Today’s deep selling on heavy volume confirmed the advantage and signaled a short-term top. The only good news from today is that this level provides a great marker to confirm buying interest on the way back up.

Under these more and more bearish circumstances, maintaining hedges makes a lot of sense for traders like myself who have chosen the aggressive strategy for the oversold period. This was my motivation in loading up on Direxion Daily Russia Bear 3X ETF (RUSS) in anticipation of a significant reversal of the V-bottom on the United States Oil ETF (USO). Russian shares have traded in tight correlation with oil. RUSS has followed a nice uptrend higher along 50DMA support.


Direxion Daily Russia Bear 3X ETF (RUSS) is still supported by a rising 50DMA. The brief pop over 200DMA resistance marked the climactic top at the end of a near parabolic surge.

Direxion Daily Russia Bear 3X ETF (RUSS) is still supported by a rising 50DMA. The brief pop over 200DMA resistance marked the climactic top at the end of a near parabolic surge.


With RUSS printing a 21% gain on the day, I did not hesitate to close out the trade even as I suspect it RUSS has at least one more big surge ahead. As a reminder, the hedges serve a purpose: to provide profits to help provide a buffer for lasting through a particularly brutal oversold period.

The iShares MSCI Emerging Markets (EEM) dropped 3.9% and printed its own fresh topping pattern. The 20DMA has emerged as stiff downward resistance for EEM. If this happened early in the oversold period, I would have quickly sold my put options (as part of an options strangle I discussed last week). Now, with bearish tidings growing, I am inclined to hold on longer, especially as I am feeling more naked with so few hedges left in the arsenal. If the bearish momentum in the stock market grows, I can see EEM easily plunging to new lows in short order.


iShares MSCI Emerging Markets (EEM) looks set to resume its steep, downward momentum

iShares MSCI Emerging Markets (EEM) looks set to resume its steep, downward momentum


I even added to my put options on Caterpillar (CAT) today.

The fresh breakdown in Netflix (NFLX) has added to my sense that the bears will summon enough energy and motivation to drag this oversold period out to extremes. When the sellers are able to start taking out the leaders that helped propped up the market so long, the warning signs flash ever brighter.


Netflix (NFLX) breaks down again below its 50DMA and leaves buyers stranded in what now looks like a topping pattern

Netflix (NFLX) breaks down again below its 50DMA and leaves buyers stranded in what now looks like a topping pattern


NFLX was presumably hit by news/rumors that Apple (AAPL) will unveil next week a streaming-TV device and service that could rival NFLX’s service. The damage was clear from the open but I took one last swing at one of my favorite trades of the year – hoping the 50DMA would manage to hold as support. With the topping pattern unfolding for NFLX, I have officially removed it from my short list of “aggressive buys.” Only Amazon.com (AMZN) and Google (GOOG) are left. I opened a trade on GOOG call options today as the stock tried to hold support at $600.

Anyway, the AAPL news knocked down NFLX and did not help AAPL one bit. The only reason why AAPL’s gap down is not as bearish as NFLX’s is that NFLX crumbled off 50DMA resistance. AAPL already accomplished this feat a while back after reporting July earnings. Today’s gap down just provided additional confirmation of the unfolding downtrend and re-established the downward trending 20DMA as resistance.


Apple (AAPL) did not benefit from the news that presumably helped take down Netflix (NFLX)

Apple (AAPL) did not benefit from the news that presumably helped take down Netflix (NFLX)


Adding to my sense that speculating in expensive stocks is slowly going out of style is the fresh breakdown in market leader iShares Nasdaq Biotechnology (IBB). Are you seeing the pattern? IBB gapped down and left buyers over the last three days stranded. The downtrending 20DMA is now confirmed as resistance.


iShares Nasdaq Biotechnology (IBB) ends a brief return to bullishness as the 200DMA breakout comes to an abrupt end.

iShares Nasdaq Biotechnology (IBB) ends a brief return to bullishness as the 200DMA breakout comes to an abrupt end.


Overall, it was another slow trading day as nothing triggered in strict accordance with my T2108 trading rules. I am still on alert for action if (when?) the VIX rechallenges the high on this cycle (or better yet surges past it). With T2108 at just 11%, I am also primed to start buying ProShares Ultra S&P500 (SSO) call options and/or fading ProShares Ultra VIX Short-Term Futures (UVXY) anew (or adding to ProShares Short VIX Short-Term Futures (SVXY)) when moves get so extreme they stretch well below the lower-Bollinger Band.

As this oversold period drags out, I realize that folks new to this may get discouraged. Maybe even panic to the point of losing focus on rules. I realize that some readers were just kids during the dot com crash. Some readers may know about those days but started into the stock market only after the financial crisis receded into the rear view mirror. In other words, you may mainly know the market as a machine that just steadily marches higher. So, for some more perspective on extreme moves, here are two windows onto what the volatility index, the VIX, did during the disruptions of the bursting of the tech bubble and the financial crisis.

Note each stock market sell-off has a slightly different signature. During the dot-com crash, the VIX never soared like it is doing now. It could not even break 34. The intense focus of sellers on tech stocks was part of the reason for this relatively mild behavior in the VIX. The S&P 500 was not impacted nearly as severely as the NASDAQ. In fact, T2108 NEVER dropped into oversold territory this entire time. After a 3-day oversold period in October, 1999 it took another TWO years for T2108 to go oversold again!


The VIX barely crossed 33 at the worst of the tech bubble crash.

The VIX barely crossed 33 at the worst of the tech bubble crash.


Source: StockCharts.com
While the NASDAQ was imploding, the S&P 500 was hanging in there relatively well...all things considered

While the NASDAQ was imploding, the S&P 500 was hanging in there relatively well…all things considered


Source: StockCharts.com

The behavior of the VIX was even MORE intriguing during the financial crisis. The VIX marched steadily higher for a month before taking a brief break. After the next run-up failed to make a new high, the VIX steadily marched downward. For the first three months, it churned widely until the S&P 500 finally made its historic low in early March. The relief resumed from there. T2108 experienced multiple oversold periods in the last four months of 2008, some interrupted by just a day. The next year only had ONE T2108 oversold period and that 15-day gut-wrencher covered the historic March, 2009 lows. Imagine sticking with the rules during THAT period, eh? (I had not yet formalized the rules at that point unfortunately).


The S&P 500 during the financial crisis: A historic V-bottom that has stood the test of time

The S&P 500 during the financial crisis: A historic V-bottom that has stood the test of time


Source: StockCharts.com
The volatility index was in decline even as the S&P 500 plunged to its historic low in early March, 2009

The volatility index was in decline even as the S&P 500 plunged to its historic low in early March, 2009


Source: StockCharts.com


Daily T2108 vs the S&P 500

Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)


Weekly T2108
Weekly T2108
*All charts created using
freestockcharts.com unless otherwise stated

The charts above are the my LATEST updates independent of the date of this given T2108 post. For my latest T2108 post click here.

Related links:
The T2108 Resource Page
Expanded daily chart of T2108 versus the S&P 500
Expanded weekly chart of T2108

Be careful out there!

Full disclosure: long SVXY shares, long SSO shares and call options, long NFLX call options, short USO call spread, short USO put options, long calls and puts on EEM, long put options on CAT, long put spread on AAPL

Sep
1

The Reserve Bank of Australia Is Content to Wait for the U.S. Federal Reserve

written by Dr. Duru
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(This is an excerpt from an article I originally published on Seeking Alpha on September 1, 2015. Click here to read the entire piece.)

The Reserve Bank of Australia (RBA) delivered another plain vanilla decision on monetary policy. The RBA barely even acknowledged the stomach-churning volatility of the past two weeks or so.

{snip}

Markets did not expect the RBA to cut rates in this meeting. The odds had fallen all the way to 6%.


The market stayed the course for very low odds of a rate cut from the Reserve Bank of Australia

The market stayed the course for very low odds of a rate cut from the Reserve Bank of Australia


Source: The ASX RBA Rate Indicator

Indeed, in this latest decision, the RBA sounds relatively unfazed by global developments. The RBA does not sound like it will respond at all. {snip}…I am pretty sure the RBA will be disappointed in waiting until December for a hike as markets currently project.

Understandably, the Australian dollar barely budged in response to the RBA’s announcement. Still, the currency is skirting along the edge of a fresh breakdown against the U.S. dollar.


The Australian dollar (FXA) is flirting with a fresh breakdown against the U.S. dollar

The Australian dollar (FXA) is flirting with a fresh breakdown against the U.S. dollar


Source: FreeStockCharts.com

As a quick sidenote, the weakening Australian dollar is at least having the intended impact on commodity producers within Australia. {snip}

Be careful out there!

(This is an excerpt from an article I originally published on Seeking Alpha on September 1, 2015. Click here to read the entire piece.)

Full disclosure: short the Australian dollar, long GLD

Aug
31

T2108 Update (August 31, 2015) – The S&P 500 Ends A Tough August With A Mix of Signals

written by Dr. Duru
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(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are likely to reverse. To learn more about it, see my T2108 Resource Page. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag. T2108-related trades and other trades are occasionally posted on twitter using the #120trade hashtag. T2107 measures the percentage of stocks trading above their respective 200DMAs)

T2108 Status: 19.1% (briefly exited oversold period with a high of 20.3%)
T2107 Status: 23.7%
VIX Status: 28.4
General (Short-term) Trading Call: Bullish
Active T2108 periods: Day #7 below 20% (oversold), Day #8 under 30%, Day #31 under 40%, Day #71 under 50%, Day #88 under 60%, Day #286 under 70%

Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or SPY
SDS (ProShares UltraShort S&P500)
U.S. Dollar Index (volatility index)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).

Commentary
T2108 made an effort to end the oversold period at six days, but my favorite technical indicator could not quite close the deal. After reaching a high of 20.3%, T2108 fell back to close at 19.1%.


T2108 briefly peaks over the oversold horizon

T2108 briefly peaks over the oversold horizon


It was a strange day for T2108 to make a run at ending the oversold period. The S&P 500 (SPY) was never up for the day and closed down 0.8%. Ditto for the NASDAQ (QQQ).


The S&P 500 runs out of gas and leaves behind a topping "small body" doji. Buyers will need to step up quickly.

The S&P 500 runs out of gas and leaves behind a topping “small body” doji. Buyers will need to step up quickly.



This monthly view puts August's sell-off into proper perspective. The month now looks like the "natural" conclusion to a year of waning momentum.

This monthly view puts August’s sell-off into proper perspective. The month now looks like the “natural” conclusion to a year of waning momentum.



The NASDAQ (QQQ) suffered the same kind of pullback as the S&P 500.

The NASDAQ (QQQ) suffered the same kind of pullback as the S&P 500.


The volatility index, the VIX, gained a healthy 9.1% that seemed well in excess of the small downtick on the S&P 500. The close at 28.4 puts the VIX back into the dangerzone and primed for more upside. Following the T2108 trading strategy I have discussed in several earlier posts, less aggressive traders/investors should stand down here and wait out the action. Aggressive traders following the T2108 trading strategy should get primed for another round of trades if the VIX manages to challenge the high printed last week. I will get extremely aggressive if the VIX somehow breaks through that high. I know a double from here seems impossible, but last week’s massive sell-off and subsequent massive bounce also seemed impossible just two weeks ago.


The volatility index is back in the dangerzone. Buckle up!

The volatility index is back in the dangerzone. Buckle up!


So how did T2108 manage to rally with BOTH major indices taking notable breathers? It had to be the commodity complex led by another surge in oil. The United States Oil ETF (USO) gained an impressive 6.8% for a third straight day of massive gains. The Energy Select Sector SPDR ETF (XLE) has enjoyed the ride. XLE gained 1.0% on the day.


United States Oil (USO) rallies strongly for a third straight day - resistance at the 50DMA looms overhead.

United States Oil (USO) rallies strongly for a third straight day – resistance at the 50DMA looms overhead.



Energy Select Sector SPDR ETF (XLE) has rallied right into it 20DMA....a critical downtrend line that has served s stiff resistance for the entire sell-off from May.

Energy Select Sector SPDR ETF (XLE) has rallied right into it 20DMA….a critical downtrend line that has served s stiff resistance for the entire sell-off from May.


I am really disappointed I missed an opportunity to double up on my rangebound bet on USO before this rally. However, my opportunity may come again soon. Not only is USO bumping up against its 50DMA overhead resistance and downwtrend, but also the volatility measure for USO, the CBOE Crude Oil Volatility Index, or OVX, jumped another 5.4%. OVX has risen on each of USO’s rally days. I THINK this counter-intuitive action warns us to expect significant downside in USO right around the corner. I am watching this one extra-closely now. Assuming USO backs down again, I am targeting about a 50% retracement of the current three days of gains.


OVX is rallying right alongside USO and oil prices.

OVX is rallying right alongside USO and oil prices.


Not even the bounceback in the U.S. dollar has slowed USO down.


The U.S. dollar index has bounced back from a brief breakdown. The 50DMA looms as the next level of resistance.

The U.S. dollar index has bounced back from a brief breakdown. The 50DMA looms as the next level of resistance.


From here, the countdown to the Federal Reserve’s highly anticipated September meeting begins in earnest…with a stop along the way at the vista point of the jobs report this Friday. Traders should not expect the market to make any progress up or down until the Fed has its say. The resulting churn and chop should frustrated bears and bulls but provide some choice trading opportunities for alert traders. Today’s strange action between the major indices, the VIX, and T2108 is probably an early sign of what is to become commonplace for the next two weeks.

Today was a relatively calm day for my own trades given the lack of definitive signals. Here are the two most notable: 1) I accumulated more Direxion Daily Russia Bear 3X ETF (RUSS) even as I was disappointed by the wide swing from a healthy gain to a healthy loss on the day; 2) a lowball limit order on Netflix (NFLX) call options triggered as the stock took a dip to a 3% loss late in the day.


Daily T2108 vs the S&P 500

Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)


Weekly T2108
Weekly T2108
*All charts created using
freestockcharts.com unless otherwise stated

The charts above are the my LATEST updates independent of the date of this given T2108 post. For my latest T2108 post click here.

Related links:
The T2108 Resource Page
Expanded daily chart of T2108 versus the S&P 500
Expanded weekly chart of T2108

Be careful out there!

Full disclosure: long SVXY shares, long SSO shares and call options, long RUSS, long NFLX call options, short USO call spread, short USO put options, long and short various currencies against the U.S. dollar

Aug
31

How to Buy Twitter’s Stock for Less Than $20/Share

written by Dr. Duru
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The big correction of August 24, 2015 (flash crash?) indiscriminately plunged stocks across the board. Twitter (TWTR) went as low as $21.01 before bouncing back and closing at $26.23. TWTR has steadily climbed along with the rest of the wobbly, recovering stock market. The lowest CLOSE for TWTR during this period, and its all-time low, is $24.38.


Twitter (TWTR) has suffered mightily after a brief spate of optimism prior to April earnings

Twitter (TWTR) has suffered mightily after a brief spate of optimism prior to April earnings


Source: FreeStockCharts.com

For reference, TWTR priced 70 million shares at $26 per share for its IPO on November 7, 2013. The stock opened for trading at $45.10.


Twitter's glory the night before its big IPO

Twitter’s glory the night before its big IPO


Source: Forbes

So, if you have been patient all this time, you can finally grab Twitter for around its IPO price. However, perhaps you really wanted the kind of discount (and buffer) that the all-time intraday low of $21.01 offered. It is still possible to get the discount by selling put options. At current options pricing, you can effectively buy TWTR for less than $20.

Put options provide the buyer the right, but not the obligation, to sell a stock at a given price called the strike price. The seller of the put option is on the hook for that right. That is, the put-seller has the OBLIGATION to buy the stock at the strike price if the put buyer decides to exercise the right. Options also have expiration dates, so the buyer’s decision to exercise or sell outright must occur before that expiration date. A seller may also chose to close out the option (buy to cover) before expiration. The closer the put gets to expiration the less valuable it becomes (aka time decay) for a given underlying stock price and “implied volatility” – good for the seller, bad for the buyer.

The put option for TWTR expiring on January 20, 2017 at the strike price of $25 sells for $540/$595 (bid/ask). Let’s split the difference and call it $565. TWTR closed Friday’s trading at $26.83 per share. If TWTR stays at the current price, the January 2017 $25 put option expires worthless. The put-seller makes money until TWTR falls below $19.35 per share (not including commissions) which equals $25 minus $5.65. This math means that for each put option the seller has potentially bought 100 TWTR shares for a net $19.35 per share. If TWTR falls below $19.35 at expiration, the put buyer will happily sell stock at $25 as s/he makes money from that point and lower. If TWTR closes on January 20, 2017 at $25 or above, the seller keeps the entire $565 premium. In between $25 and $19.35 the seller keeps a portion of the premium.

I came up with this idea very late in the week. As I was sorting through my trades and strategies for the market’s sell-off, it suddenly occurred to me that I was not taking full advantage of the surge in volatility by selling now expensive put options. In case you missed it, volatility surged a massive amount at the end of the market sell-off. This chart is from Thursday, August 27th’s close. The volatility index, the VIX, closed Friday at essentially the same spot.


The volatility index, the VIX, has now lost half its value from the intraday high just three days ago.

The volatility index, the VIX, has now lost half its value from the intraday high just three days ago.


Source: FreeStockCharts.com

According to ETrade, TWTR’s January 2017 $25 put reached as high as $7.44 during this period. As I noted after Monday’s sell-off, market makers seemed unwilling to offer up options for trading until the dust settled a bit after Monday’s open. I was unable to get ANY options traded (I was scrambling for call options) until around 30 minutes or so post-open. Market makers were waiting for good reason! The VIX quickly fell from a high of 52.3 to close the day at 40.7 – representing a massive change (reduction) in option values for a given stock price.

TWTR is attractive for put-selling for at least two related reasons. Most importantly, I think TWTR has SOME value at least around its IPO price. I am betting that TWTR’s business model can stabilize and achieve success within the next 16 months. Anything can happen of course, but I am a lot more willing to take the risk at $19.35 than $26.86. Selling a put expiring way out in January, 2017 allows me to relax through whatever swings are ahead and gives me the option to profit (potentially) well ahead of expiration if TWTR goes on another run in this time.

Secondly, TWTR’s premium is very high, so it makes for a very attractive sell (and a poor buy) at far out dates. At $19.35, I effectively got TWTR for a 28% discount. I doubt this kind of discount will last as the market settles down over time. For comparison, Google (GOOG) currently trades at $630 per share. The January 2017 $630 put option on GOOG is roughly similar to the January 2017 $25 TWTR put option (the strike price closest to the current trading price). The GOOG put option sells for $77.90/$79.40 – let’s say $78.20. Yes, that is a VERY healthy premium, but it only delivers a 12% discount on Google’s shares. In other words, TWTR holds roughly double the premium GOOG holds. This expense is of course for very good reason: TWTR is trading near all-time lows while GOOG is trading near all-time highs. The market has a LOT more confidence in GOOG’s ability to avoid another deep sell-off than TWTR.

So what is the catch? I have already discussed the possibility of losing money on the put option. The other catch is that the upside for the put-seller is capped by the premium collected at the time of sale. If TWTR is trading back to $50 by the time of expiration, the put-seller still only collects $565. This is a scenario I am willing to tolerate, and I would consider such a rally a “good problem” to have given the risks inherent in a speculative stock like Twitter.

Finally, market sentiment is not as bad as I was expecting against Twitter. “Only” 6.7% of its float is sold short according to Yahoo! Finance. However, short interest has soared in recent weeks as Twitter has mightily struggled. It takes a serious contrarian to look at the chart below and project out a positive outcome!


Twitter (TWTR) bears are pressing their bets again

Twitter (TWTR) bears are pressing their bets again


Source: NASDAQ.com

At least my favorite herd, the stock fanatics on StockTwits, are still very bullish on TWTR…


At least the StockTwits "herd" is staunchly bullish on TWTR at these low prices.

At least the StockTwits “herd” is staunchly bullish on TWTR at these low prices.


Source: StockTwits.com

(Incredibly, James B. Stewart, a columnist at The New York Times, a staff writer at The New Yorker, and a professor at the Columbia University School of Journalism, recently reported that value investor William Miller is currently kicking the tires on Twitter. More on Stewart’s column in another post…)

For an example of a long-term CALL buying strategy, see my recent piece on Disney called “Disney’s Bearish Breakdown: A Case Study of Risk Management for Long-Term Investors.”

Be careful out there!

Full disclosure: short TWTR put option

Aug
30

A Time to Buy Housing Stocks: iShares US Home Construction

written by Dr. Duru
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(This is an excerpt from an article I originally published on Seeking Alpha on August 27, 2015. Click here to read the entire piece.)

When I wrote “A Time To Sell Some Housing Stocks,” I could not have come close to imagining its timeliness. The current market sell-off since then has been so deep and rapid that I have accelerated my plans to put cash back to work.

The first candidate is iShares US Home Construction (ITB). I missed the big plunge on Monday, August 24th as I was busy chasing down other opportunities. I did not hesitate to start loading up the next day when ITB fell to a new low for the current selling cycle.


iShares US Home Construction (ITB) attempts to hold onto support at its 200-day moving average (DMA)

iShares US Home Construction (ITB) attempts to hold onto support at its 200-day moving average (DMA)


Source: FreeStockCharts.com

{snip}

I found some level of comfort in my earlier than anticipated repurchase of ITB from the new home sales data. {snip}


Sales of new single-family homes have remained strong in 2015 but have yet to resume the uptrend in place since the 2010/2011 trough

Sales of new single-family homes have remained strong in 2015 but have yet to resume the uptrend in place since the 2010/2011 trough


Source: US. Bureau of the Census, New One Family Houses Sold: United States [HSN1F], retrieved from FRED, Federal Reserve Bank of St. Louis, August 27, 2015.

Year-over-year and monthly sales were strong across three out of four regions. {snip}

The most interesting part of the report came from the distribution of sales across price ranges. The June report showed a surprising relative surge of sales in the $200,000 to $299,000 range to 40% of all homes. This share dropped all the way to 32% in the July report which puts the share back within the 30 to 35% range that has held for quite some time. {snip}

Note well that I did not buy ITB here because I am certain a final bottom is now in the rear view mirror. The stock market seems sure to exhibit a lot more volatility in coming weeks and perhaps months. {snip}

Be careful out there!

Full disclosure: long call options on ITB

(This is an excerpt from an article I originally published on Seeking Alpha on August 27, 2015. Click here to read the entire piece.)

Aug
30

Century Communities Earnings: All About Atlanta Now

written by Dr. Duru
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(This is an excerpt from an article I originally published on Seeking Alpha on August 17, 2015. Click here to read the entire piece.)

After regional homebuilder LGI Homes (LGIH) produced stellar earnings results earlier this month, I had high hopes for Century Communities (CCS) as well. CCS’s results for its second quarter were good, but not LGIH-level good. The performance in Texas delivered the most stark contrast. Whereas LGIH demonstrated outstanding sales strength in its core Texas market, CCS was more subdued on its Texas business. {snip}

{snip}

The big surprise (for me) in the results from CCS is the increasing concentration of the company’s business in Atlanta. {snip}


Unemployment in Atlanta has rapidly improved but is still not back to pre-recession highs

Unemployment in Atlanta has rapidly improved but is still not back to pre-recession highs


Source: US. Bureau of Labor Statistics, Unemployment Rate in Atlanta-Sandy Springs-Marietta, GA (MSA) [ATLA013UR], retrieved from FRED, Federal Reserve Bank of St. Louis, August 16, 2015.

The concentration of building in Atlanta means CCS is all about Atlanta now in addition to its (original) core business in Colorado. For comparison and reference, here is the unemployment rate for the state of Colorado:


Unemployment may have reached a trough for the state of Colorado, but once again it is well below the national average

Unemployment may have reached a trough for the state of Colorado, but once again it is well below the national average


Source: US. Bureau of Labor Statistics, Unemployment Rate in Colorado [COUR], retrieved from FRED, Federal Reserve Bank of St. Louis, August 17, 2015.

In other words, from the lens of upside potential, Atlanta probably has more room for improvement than Colorado. {snip}

Increased guidance was the best news coming from CCS. {snip}

This guidance of course includes very bullish expectations for the Atlanta market. The guidance also builds upon second quarter results with impressive year-over-year growth (bolstered by acquisition activity):

{snip}


So far so good in the market's reaction to the latest earnings from Century Communities, Inc. (CCS)

So far so good in the market’s reaction to the latest earnings from Century Communities, Inc. (CCS)


Source: FreeStockCharts.com

Be careful out there!

Full disclosure: Long CCS

(This is an excerpt from an article I originally published on Seeking Alpha on August 17, 2015. Click here to read the entire piece.)

Aug
30

T2108 Update (August 28, 2015) – The Stock Market Remains Oversold, But It’s Almost Like Nothing Happened

written by Dr. Duru
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(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are likely to reverse. To learn more about it, see my T2108 Resource Page. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag. T2108-related trades and other trades are occasionally posted on twitter using the #120trade hashtag. T2107 measures the percentage of stocks trading above their respective 200DMAs)

T2108 Status: 18.5%
T2107 Status: 24.1%
VIX Status: 26.1
General (Short-term) Trading Call: Bullish
Active T2108 periods: Day #6 below 20% (oversold), Day #7 under 30%, Day #30 under 40%, Day #70 under 50%, Day #87 under 60%, Day #285 under 70%

Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or SPY
SDS (ProShares UltraShort S&P500)
U.S. Dollar Index (volatility index)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).

Commentary
Did the S&P 500 (SPY) really close the week with a 0.9% gain? If you were not paying any attention to the market, you might mistakenly think all is well and normal, just another sleepy week of summer.


The S&P 500 (SPY) makes a major swing: it lost as much as 5.2% for the week and ended the week with a 0.9% gain.

The S&P 500 (SPY) makes a major swing: it lost as much as 5.2% for the week and ended the week with a 0.9% gain.


T2108 also made a complete recovery with a close at 18.5%, right in line with last week’s 18.1% close. T2108 even made a run at ending the oversold period when it got as high as 19.4%.

The volatility index, the VIX, stayed essentially flat from Thursday’s close and closed below the previous week’s close. The VIX remains in a position for less aggressive traders to make T2108 oversold buys with the caveats I mentioned in the last T2108 Update.


The volatility index is in retreat but remains elevated.

The volatility index is in retreat but remains elevated.


Strangely, the ProShares Short VIX Short-Term Futures (SVXY) lost a sizable 4.9% despite the flat close of the VIX. Once again, the 51 level provided modest support for SVXY. This time I decided to dive in with another short-term trade (meaning this supplements the SVXY shares I have accumulated as a part of the T2108 oversold aggressive trading strategy).


Despite the S&P 500's roaring comeback off its 10-month low, ProShares Short VIX Short-Term Futures (SVXY) is still struggling with its 2015 low. A buying opportunity or a warning?

Despite the S&P 500’s roaring comeback off its 10-month low, ProShares Short VIX Short-Term Futures (SVXY) is still struggling with its 2015 low. A buying opportunity or a warning?


Order is far from restored in the world of currencies. Reversals of last week’s chaos are still underway. My best tell, the Australian dollar (FXA) versus the Japanese yen (FXY), aka AUD/JPY, closed the week on a strong note after early weakness on Friday. It still has a ways to go return to the previous week’s close around 89.33.


The bounce from lows for the Australian dollar versus the Japanese yen supports the rebound in the stock market

The bounce from lows for the Australian dollar versus the Japanese yen supports the rebound in the stock market


The gap that remains for AUD/JPY to the previous week’s close likely represents the upside opportunity for the S&P 500 in the coming week. The coming week will end with the last jobs report before the much anticipated September 16-17 Federal Reserve meeting. The Fed collectively in the past few days has done its best to both reassure markets and add no new net information. In case you were wondering, the odds for a September hike remain extremely low by the market’s estimation. The market is just barely willing to believe there will be ANY rate hike this year.


The odds for the first rate hike are barely priced for a December, 2015 lift-off.

The odds for the first rate hike are barely priced for a December, 2015 lift-off.


Source: CME Group FedWatch
(Note for the previous day’s odds, I had to use numbers I recorded the previous day. The CME still has issues properly updating its table. Also nte that I have been told these values are updated at 8am Eastern and NOT at the close of trading).

Volatility should remain elevated at least through the September jobs report if not all the way through to the September Fed meeting. As such, I am prepared for T2108 to exit the current oversold period only to return, say, after Labor Day when the really big money supposedly returns to the market (and probably ready to sell after getting spooked by the severe trading action of this oversold period!).

If the VIX is STILL elevated ahead of the Fed meeting, I will likely put on a pretty substantial bet to fade volatility. Stay tuned on that one as the nature of the bet will strongly depend on T2108 conditions; oversold conditions would be an ideal context for fading volatility ahead of the Fed meeting.

The strength of the market’s leaders has become one the most important features of the rally off oversold lows. The big tech giants for the most part stepped up and helped lead the way higher. While the S&P 500 is underwater year-to-date by 3.4%, these leaders are all still sitting on gains for the year. In most cases, these stocks have very comfortable year-to-date gains along with good technical positions. All but one has COMPLETELY reversed its losses from the oversold period which began with the previous Friday’s close. I think these charts speak for themselves: Apple (AAPL), Amazon.com (AMZN), Netflix (NFLX), and Google (GOOG). There is a near poetic symmetry in the positioning of these stocks that you just could not make up even if you tried. For all these stocks it is almost like nothing happened last week. Investors and traders clearly rushed for the relative “safety” of these names almost on reflex.


Apple (AAPL) started the rally early as it reversed all its losses from the oversold period within 2 days but faded hard on that second day. As it fights with its 20DMA, AAPL finds itself back to its price BEFORE the oversold period began.

Apple (AAPL) started the rally early as it reversed all its losses from the oversold period within 2 days but faded hard on that second day. As it fights with its 20DMA, AAPL finds itself back to its price BEFORE the oversold period began.

Amazon.com (AMZN) is trading comfortably well above its 50DMA again. Like AAPL, AMZN is trading where it sat BEFORE the oversold period began and is arguing for space around its 20DMA.

Amazon.com (AMZN) is trading comfortably well above its 50DMA again. Like AAPL, AMZN is trading where it sat BEFORE the oversold period began and is arguing for space around its 20DMA.

Like AMZN, Google (GOOG) is also comfortably above its 50DMA. Like AAPL, it is now struggling with its 20DMA. Losses from the oversold period are a fading memory.

Like AMZN, Google (GOOG) is also comfortably above its 50DMA. Like AAPL, it is now struggling with its 20DMA. Losses from the oversold period are a fading memory.

Netflix (NFLX) is comfortably above its 50DMA, has put its losses from the oversold period in the rearview mirror, and has almost reversed ALL its losses from the breakdown associated with the correction. Like the other big boys, it is currently struggling at its 20DMA

Netflix (NFLX) is comfortably above its 50DMA, has put its losses from the oversold period in the rearview mirror, and has almost reversed ALL its losses from the breakdown associated with the correction. Like the other big boys, it is currently struggling at its 20DMA


As an on-going feature for this oversold period, I am providing a quick summary of my key trades. I hope this helps those of you who are new to the T2108 trading strategy understand my approach and trigger some ideas for trades as the market churns through this chaotic period. These are also great notes for me and have served me very well to stay grounded.

  • Sold SanDisk (SNDK) reluctantly. After hitting a new high for the bounce off lows, SNDK faded enough to take out my trailing stop. This was a high risk trade bought with shares. I was fortunate not to let myself get stopped out for a loss earlier in the week!
  • Bought shares in Direxion Daily Russia Bear 3X ETF (RUSS). This is a bit of a hedge that is also a play on RUSS’s rising uptrend. See chart below.
  • Sold a put option short in Twitter (TWTR). I will explain this trade in another post.
  • As explained earlier, bought a new tranche of short-term shares in SVXY.
  • Sold call options on Facebook (FB). FB is back to 50DMA resistance so this is a good spot to lock in the profits.
  • Bought call options on Solar City (SCTY). I thought I had missed the trade I mapped out earlier. A fade into the close gave me a much better entry point.
  • While I was able to flip a good number of positions for substantial profits in the oversold period (as chronicled in earlier posts), I did have to wave goodbye to a few positions that expired worthless. Some of htese were in names that delivered profits with better timed positioning. Call options on ProShares Ultra S&P500 (SSO), Disney (DIS) {I never did get in on the January, 2017 $110 call option as part of a strategy I outlined earlier. It is top of my list for the next sell-off if it comes}, iShares Nasdaq Biotechnology (IBB), Workday (WDAY); put options on ProShares Ultra VIX Short-Term Futures (UVXY).


The 50DMA has guided Direxion Daily Russia Bear 3X ETF (RUSS) on a near consistent ride higher. Even if Monday was a blow-off top, RUSS probably has at least one more rendezvous with 200DMA resistance ahead.

The 50DMA has guided Direxion Daily Russia Bear 3X ETF (RUSS) on a near consistent ride higher. Even if Monday was a blow-off top, RUSS probably has at least one more rendezvous with 200DMA resistance ahead.


Finally, just so we are all on the same page that something major DID happen, here is a very handy chart from Bloomberg that outlines the major events surrounding the implosion of the Shanghai Composite (SSEC). The Chinese government finally stopped defending the 200DMA last week. Perhaps it was NO coincidence that the 200DMA breakdown for the SSEC on Friday, August 21 happened ahead of the S&P 500’s plunge into oversold conditions. The S&P 500 broke down below its 200DMA the day before.

Click for a larger image…


A timeline for the bursting of a major bubble in the Shanghai Composite Index

A timeline for the bursting of a major bubble in the Shanghai Composite Index


Source: Bloomberg


Daily T2108 vs the S&P 500

Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)


Weekly T2108
Weekly T2108
*All charts created using
freestockcharts.com unless otherwise stated

The charts above are the my LATEST updates independent of the date of this given T2108 post. For my latest T2108 post click here.

Related links:
The T2108 Resource Page
Expanded daily chart of T2108 versus the S&P 500
Expanded weekly chart of T2108

Be careful out there!

Full disclosure: long SVXY shares, long SSO shares and call options, short AUD/JPY, long RUSS, long AAPL put spread, short TWTR put option and long call spread, short FB, long SCTY call option, long DIS call options, long UVXY put options

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