(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: 70% (overbought day #2)
VIX Status: 22
General (Short-term) Trading Call: Close more bullish positions, begin/expand bearish positions
Commentary
T2108 closed the day clinging to overbought territory. I intended to expand my own bearish T2108 positioning. However, I realized that SDS is still sitting near flat with my original purchase price. So, instead, I decided to wait until I can fade the next upward surge in the S&P 500 (SPY). I am not predicting another surge. I am just stating my rule here for expanding my SDS position; if I had no SDS in play, I would have definitely initiated a position. In the meantime, I decided to speculate on VXX calls (not in the T2108 portfolio) just as an ordinary play on 200DMA approximate support. VXX closed BELOW the 200DMA, but has not yet broken below December’s low.
The volatility index, the VIX, is still trapped between presumed support and the recent downtrend line. I think a resolution of this convergence will be explosive. I may convert my VXX calls into a strangle position by adding VXX puts.
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 and , long VXX calls
Thanks, I like the chart with the SPY and T2108 overlaid.
Cool. One of these days, I will figure out how to line it up so it is easier to compare the concurrent changes in the charts.