(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. To learn more about it, see my T2108 Resource Page.)
T2108 Status: 55% and Neutral
General Trading Call: Hold.
Commentary
T2108 dropped 9 percentage points to 55% as the S&P 500 dropped 0.8%. So far, the index is holding the first support line at 1330.
As mention in the previous update, it now makes sense to start adding or initiating shorts as soon as T2108 gets overbought. The current trading call to “hold” assumes some shorts are in the portfolio. Shorts made in the previous 2-3 days should be doing OK now. Stops for those shorts could be triggered when the S&P 500 hits 1360 and definitely if it hits a new multi-year high above 1371. However, if the current swoon continues downward closer to oversold levels, we should see the S&P 500 break the 50DMA at 1323.
If a trader has no shorts in the portfolio, the better risk/reward move is to wait until the first support line breaks.
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