Today is the first day for posting the updates for T2108, the percentage of stocks trading above their respective 40-day moving averages (DMAs) on this blog. If you do not know anything about this powerful technical indicator, please see my T2108 Resource Page. This page also includes an archive of the commentary I posted on T2108 from February to May, 2011. (Click here for more background on the changes I am making to my various blogs).
Each T2108 Update will have the simple title “T2108 Update: Month Day, Year,” and I will tag it with the terms “T2108” and “technical analysis”. At a bare minimum, I will include the latest value for T2108, some commentary, any thoughts on implications, and a short-term trading call based on T2108. Expanded charts for T2108 will remain on the T2108 Resource Page which you can always access via the same links – either go to the page itself or click directly on the graphics for the daily chart versus the S&P 500 and/or the weekly chart. I do not archive past snapshots for T2108. These links will always go to my latest snapshot.
Alright, now for today’s update.
T2108 Status: 72% and Overbought
General Trading Call: Start selling longs. Identify shorts to execute on test of resistance or break of support.
Commentary
T2108 continues its choppy pattern of jumping in and out of overbought territory. Each entry into overbought territory has brought imminent shorting opportunities; T2108 has spent no more than six days overbought in 2011. The second highest duration was the previous one at five days. Given the market’s continued resilience in the face of bad news, traders must assume the bulls retain control and act accordingly. Shorts here make the most sense at clear resistance (with a tight stop), like S&P 500 at its intra-day, multi-year high of 1370 or on a break of support at the May low of 1329. The S&P 500 is currently at 1357.
Charts below are the latest snapshots of T2108 (and the S&P 500)
Daily T2108 vs the S&P 500
Black line: T2108 (measured on the right); Red line: S&P 500 (for comparative purposes)
Weekly T2108
*All charts created using TeleChart:
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 SSO puts