T2108 Update: May 18, 2011

(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: 54% and Neutral
General Trading Call: Hold.

Commentary
T2108 jumped 7.5 percentage points from yesterday’s 46% level. As expected, conditions were ripe for a bounce given T2108 had dropped below the April low, and the S&P 500 was toying with support directly on the 50DMA with a hammer candlestick pattern. The S&P 500 rallied a little less than 1% right into the short-term downtrend line (chart not shown, see stockcharts for further detail). While it could make sense to attempt a fade here, recall that once the April short-term downtrend broke with a gap above the 50DMA, the S&P 500 raced straight to fresh multi-year highs. I am not expecting such a fresh run, but this is the context of risk that a trader must keep in mind.

The general trading call is set to neutral to reflect the above-mentioned balance of upside/downside risks.


Charts below are the latest snapshots of T2108 (and the S&P 500)

Daily T2108 vs the S&P 500
T2108 vs. the S&P 500 (DAILY)

Black line: T2108 (measured on the right); Red line: S&P 500 (for comparative purposes)


Weekly T2108
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

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