{"id":11628,"date":"2012-05-16T01:10:54","date_gmt":"2012-05-16T05:10:54","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=11628"},"modified":"2012-05-16T01:10:54","modified_gmt":"2012-05-16T05:10:54","slug":"t2108-update-120515","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/05\/16\/t2108-update-120515\/","title":{"rendered":"T2108 Update (May 15, 2012) &#8211; Fallen From the Edge But Not Yet Oversold"},"content":{"rendered":"<p>(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. To learn more about it, see my <a href=\"http:\/\/www.drduru.com\/money\/T2108.htm\">T2108 Resource Page<\/a>. You can <a href=\"http:\/\/twitter.com\/#!\/search\/%23T2108\">follow real-time T2108 commentary<\/a> on twitter using the #T2108 hashtag. T2108-related trades and other trades are posted on twitter using <a href=\"http:\/\/twitter.com\/#!\/search\/%23120trade\" target=\"_blank\">the #120trade hashtag<\/a>)<\/p>\n<p><strong>T2108 Status<\/strong>: 27.6%<br \/>\n<strong>VIX Status<\/strong>: 22.0%<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Hold but keep VXX calls in the holster. (<a href=\"http:\/\/twitter.com\/#!\/search\/%23120trade\" target=\"_blank\">click here<\/a> for a trading summary posted on twitter)<br \/>\n<strong>Reference Charts<\/strong> (click for view of last 6 months from Stockcharts.com):<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$SPX&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p14085208538\" title=\"6-month chart of the S&#038;P 500\" target=\"_blank\">S&#038;P 500<\/a> or <a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p14085208538\" title=\"6-month chart of SPY\" target=\"_blank\">SPY<\/a><br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p15880085697\" title=\"6-month chart of SDS\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&#038;P500)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p25615696567\" title=\"6-month chart of the U.S. dollar\" target=\"_blank\">U.S. Dollar Index<\/a> (volatility index)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$VIX&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p25615696567\" title=\"6-month chart of the VIX\" target=\"_blank\">VIX<\/a> (volatility index)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=VXX&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p15880085697\" title=\"6-month chart of VXX\" target=\"_blank\">VXX<\/a> (iPath S&#038;P 500 VIX Short-Term Futures ETN)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=EWG&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p15880085697\" title=\"6-month chart of EWG\" target=\"_blank\">EWG<\/a> (iShares MSCI Germany Index Fund)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=CAT&#038;p=D&#038;st=2011-11-15&#038;en=2011-05-15&#038;id=p15880085697\" title=\"6-month chart of CAT\" target=\"_blank\">CAT<\/a> (Caterpillar)<\/p>\n<p><strong>Commentary<\/strong><br \/>\nMaybe traders are taking money out of stocks and saving up for the hundreds of millions of shares Facebook (FB) will rain down on the market in Friday&#8217;s IPO. I find it ironic that as the Facebook IPO gets ever more valuable and pricey, the general market is sinking and limping. Either Facebook is going to save the market by catalyzing a nice oversold bounce on Friday, or Facebook will fire off the last rockets we see for the summer. For now, I am betting on the former, but the bears are starting to win the argument&#8230;<\/p>\n<p>I figured T2108 might hit oversold today, but it only nudged down to 27.6. Granted, the S&#038;P 500 only lost 0.6%, but given the number of breakdowns I see in stocks, I figured the index was not telling the whole story. Regardless, the momentum is firmly pointing downward as the market has fallen from the &#8220;edge.&#8221; The S&#038;P 500 has now essentially erased all its gains from the breakout on February 3rd. The S&#038;P 500 has now gone from a double-digit gain this year to a 5.8% gain. Stochastics are now almost as oversold as they were in the swift swoon in late November.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_11629\" aria-describedby=\"caption-attachment-11629\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_SP500.png\" alt=\"The S&amp;P 500 falls from the edge\" title=\"The S&amp;P 500 falls from the edge\" width=\"500\" height=\"350\" class=\"size-full wp-image-11629\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_SP500.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_SP500-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11629\" class=\"wp-caption-text\">The S&P 500 falls from the edge<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Even more importantly, the volatility index, the VIX, has finally broken out above the critical 21 level. This point marked the beginning of last summer&#8217;s swoon. Consider this our first deep red warning. I am all in favor of buying some out of the money calls on VXX here just in case we get something big just like early August. Until the VIX comes back down, VXX is officially a buy. If I had been paying closer attention at the close today, I would already have a fistful of VXX calls in the T2108 portfolio right now. Instead, I have wilting puts!<\/p>\n<p><center><br \/>\n<figure id=\"attachment_11630\" aria-describedby=\"caption-attachment-11630\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_VIX.png\" alt=\"The VIX could be getting ready to skyrocket - it makes sense to start bracing your portfolio even as T2108 edges closer to oversold\" title=\"The VIX could be getting ready to skyrocket - it makes sense to start bracing your portfolio even as T2108 edges closer to oversold\" width=\"500\" height=\"350\" class=\"size-full wp-image-11630\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_VIX.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_VIX-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11630\" class=\"wp-caption-text\">The VIX could be getting ready to skyrocket - it makes sense to start bracing your portfolio even as T2108 edges closer to oversold<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>My industrial bellweather, Caterpillar (CAT), is now just one year-starting gap away from erasing all its gains for 2012. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_11631\" aria-describedby=\"caption-attachment-11631\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_CAT.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_CAT.png\" alt=\"CAT is about to lose ALL its gains for 2012\" title=\"CAT is about to lose ALL its gains for 2012\" width=\"500\" height=\"350\" class=\"size-full wp-image-11631\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_CAT.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/05\/120515_CAT-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11631\" class=\"wp-caption-text\">CAT is about to lose ALL its gains for 2012<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Ultimately, foreign exchange will be our guide on what to expect. As long as the euro is sinking like a stone, I cannot expect the market to bounce much, if at all. (See &#8220;<a href=\"http:\/\/seekingalpha.com\/article\/584231-a-sinking-euro-sets-up-franc-strength-and-bargain-german-stocks\" target=\"_blank\">A Sinking Euro Sets Up Franc Strength And Bargain German Stocks<\/a>&#8221; for more discussion about the euro).<\/p>\n<p>Needless to say, I now see danger in the market everywhere even as I salivate over picking spots in an oversold market. When the next bounce comes, I firmly expect former support at the May, 2011 highs and last big breakout to become strong resistance, especially given the current accumulation of bearish signals. (See &#8220;<a href=\"http:\/\/drduru.com\/onetwentytwo\/2012\/05\/15\/apple-breaks-support\/\" target=\"_blank\">Chart Review: Apple Breaks First Critical Support As Downtrend Continues<\/a>&#8221; for a bearish look at Apple&#8217;s (AAPL) stock chart).<\/p>\n<p>(Note &#8211; as of May 11, 2012, some glitch in FreeStockCharts.com is screwing up the overlay of the S&#038;P 500 with T2108).<\/p>\n<p><strong>Daily T2108 vs the S&#038;P 500<\/strong><br \/>\n<a href=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily_s.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily_s.png\" width=\"500\" height=\"350\" alt=\"T2108 vs. the S&#038;P 500 (DAILY)\" title=\"T2108 vs. the S&#038;P 500 (DAILY)\"><\/a><\/p>\n<p>Black line: T2108 (measured on the right); Green line: S&#038;P 500 (for comparative purposes)<br \/>\n<\/center><\/p>\n<p><center><br \/>\n<strong>Weekly T2108<\/strong><br \/>\n<a href=\"http:\/\/www.drduru.com\/money\/charts\/T2108-weekly_s.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-weekly_s.png\" width=\"500\" height=\"350\" alt=\"Weekly T2108\" title=\"Weekly T2108\"><br \/>\n*<strong>All charts created using <a href=\"http:\/\/www.freestockcharts.com\/\" title=\"Freestockcharts.com\" target=\"_blank\">freestockcharts.com<\/a><\/strong> unless otherwise stated<\/a><br \/>\n<\/center><\/p>\n<p><strong>Related links:<\/strong><br \/>\n<a href=\"http:\/\/www.drduru.com\/money\/T2108.htm\">The T2108 Resource Page<\/a><br \/>\n<a href=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily.jpg\">Expanded daily chart of T2108 versus the S&#038;P 500<\/a><br \/>\n<a href=\"http:\/\/www.drduru.com\/money\/charts\/T2108-weekly.jpg\">Expanded weekly chart of T2108 <\/a><\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: long SDS; long VXX put, long CAT shares and puts, long SSO calls, short EUR\/USD<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(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: 27.6% VIX Status: 22.0% &#8230; <a title=\"T2108 Update (May 15, 2012) &#8211; Fallen From the Edge But Not Yet Oversold\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/05\/16\/t2108-update-120515\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[135,62],"tags":[64,63,549,943,65,446,226,1597,303,931],"class_list":["post-11628","post","type-post","status-publish","format-standard","hentry","category-stock-market-trading","category-technical-analysis","tag-cat","tag-caterpillar-inc","tag-facebook","tag-fb","tag-sp-500","tag-sso","tag-t2108","tag-technical-analysis","tag-vix","tag-volatility-index"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update (May 15, 2012) - Fallen From the Edge But Not Yet Oversold - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/05\/16\/t2108-update-120515\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (May 15, 2012) - Fallen From the Edge But Not Yet Oversold - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(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: 27.6% VIX Status: 22.0% ... 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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: 27.6% VIX Status: 22.0% ... 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