(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. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag. T2108-related trades and other trades are posted on twitter using the #120trade hashtag)
T2108 Status: 84% (eleventh day of overbought period)
VIX Status: 29.9
General (Short-term) Trading Call: Hold
Commentary
For the eleventh straight day, T2108 closed in overbought territory. My recently updated analysis of overbought periods confirms that this overbought period is reaching historic levels and remains extreme with so many days above 80%.
T2108 is levitating and so is the S&P 500. During this overbought period, the S&P 500 has bounced between 1216 and 1290. The presumed support at the 50DMA continues to creep upward; it has now carved out support at 1200. Overbought stochastics have cooled off over the last 5 trading days, relieving some of the overbought pressure. The VIX has now bounced around 30 for almost a month and time is running out for my bearish position on VXX to return to its former profitable self.
In other words, the stock market is now just levitating – I suppose waiting for a catalyst to kick off the next big move. In the meantime, the trading call remains to hold and NOT to get aggressive in building bearish positions.
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); Green line: S&P 500 (for comparative purposes)
Weekly T2108
*All charts created using freestockcharts.com unless otherwise stated
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 SDS, long puts on VXX