ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
T2108, the percentage of stocks trading above their respective 40-day moving averages (DMAs), has finally moved higher. For much of 2011, T2108 has lingered just above or just below the overbought threshold of 70% (see my new T2108 resource page). It is now at 74.6%. The last time T2108 was this high was 3 months … Read more
I thought I would get extremely bearish once the S&P 500 reached my upside resistance target of 1300-1310. Yet here we are just five weeks into the year, and the deepest angst I can summon is an uncomfortable sense of “caution.” With T2108 – the percentage of stocks trading above their respective 40-day moving averages … Read more
A month ago, I laid out the case for the S&P 500 sustaining its upward momentum. I pointed to 1300-1310 as the next point of strong resistance. As the S&P 500 nears that point (half of a percent away now), I marvel at how quickly this test has come. T2108, the percentage of stocks trading … Read more
Throughout the stock market’s meandering upward in December, I maintained that technical conditions were not yet overbought. I also noted that T2108, the percentage of stocks trading above their 40-day moving averages (DMAs), would likely not reach the overbought threshold (at least 70%) until a rush of “panicked buyers” sent the market soaring higher. I … Read more
Last week, I claimed that the market is not yet overbought and that any corrections in the short-term will most likely be shallow. Without some specific and new catalyst, traders and investors, especially the ones who missed this latest rally, will treat pullbacks as golden buying opportunities. Moreover, I noted how, as expected, many analysts … Read more
I have seen and heard several headlines pronouncing that the market is overbought, extremely overbought even. Yet, my favorite oversold/overbought indicator, T2108, the percentage of stocks trading above their respective 40-day moving averages (DMAs), has calmly churned around 60% for almost the entire month of December. The market is typically considered overbought after T2108 crosses … Read more
The S&P 500 printed fresh 2-year highs last week with decent volume. This marks a successful follow-through to the breakout from November’s trading channel. Given the index is now tagging the upper-Bollinger Band, it is even more likely that this move will be sustained, at least in the short-term. The longer-term chart suggests that the … Read more
The week ended with the S&P 500, SLV (a silver ETF), and GLD (a gold ETF) all approaching former 52-week highs. The U.S. dollar dropped 1.3% on Friday, decisively failing at resistance at its 200-day moving average (DMA) and putting an exclamation point on the week’s action. The S&P 500 broke through its last battle … Read more
I did not think the bulls could pull off an Act 2 defending the 50-day moving average (DMA) support on the S&P 500, but defend they did. Presumably, the stock market left behind fears of a Korean conflagration and an implosion of European sovereign debt in favor of encouraging economic news, like unemployment claims dropping … Read more
After the stock market finally tumbled from overbought conditions, I concluded that “…hope remains for bullish wishes, but all the warning signs are tilting comfort levels to the bears.” Bears are now making themselves feel right at home. On Tuesday, the S&P 500 lost 1.6% on higher than average volume, creating the kind of strong … Read more