(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%.
VIX Status: 19.5.
General (Short-term) Trading Call: Hold.
Commentary
T2108 nudged upward to 54% from 51%. As I guessed yesterday, the oversold stochastics on the S&P 500 were good for a (one-day) bounce back to the 50DMA. I think the regularly scheduled selling will resume next week.
HOWEVER, a major caveat has developed in the form of Apple (AAPL). As I have stated in the past, it is hard to get overly bearish when AAPL is doing well. On Friday, the stock had a strong close to finish at all-time highs. Earnings are coming Tuesday night (July 19th), and it seems traders are trying to get in ahead of what they perceive will be excellent results. Whatever made traders and investors so timid just a month ago when Apple underperformed the market has suddenly disappeared from their radar. If AAPL’s results excite the market with better than expected results (hard to do for Apple), the regularly scheduled selling in the market should be postponed for at least a few days. While I have absolutely no interest in shorting AAPL, I will be looking to fade the next stock market rally…especially if T2108 manages to flip back into overbought territory.
Otherwise, my forecast remains for T2108 to hit the low 30s before the current short-term downtrend ends.
Charts below are the latest snapshots of T2108 (and the S&P 500)
Refresh browser if the charts are the same as the last T2108 update.
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 puts on SSO, long SDS