{"id":12492,"date":"2012-06-22T03:08:02","date_gmt":"2012-06-22T07:08:02","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=12492"},"modified":"2012-06-22T03:14:58","modified_gmt":"2012-06-22T07:14:58","slug":"t2108-update-120621","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120621\/","title":{"rendered":"T2108 Update (June 21, 2012) &#8211; Caution Prevails Yet Again As Churn Returns"},"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>: 34.9%<br \/>\n<strong>VIX Status<\/strong>: 20.1<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Hold with bearish hedges<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=$SPX&#038;p=D&#038;st=2011-12-21&#038;en=2012-06-21&#038;id=p14085208538\" title=\"6-month chart of the S&#038;P 500\" target=\"_blank\">S&#038;P 500<\/a> or <a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&#038;p=D&#038;st=2011-12-21&#038;en=2012-06-21&#038;id=p14085208538\" title=\"6-month chart of SPY\" target=\"_blank\">SPY<\/a><br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&#038;p=D&#038;st=2011-12-21&#038;en=2012-06-21&#038;id=p15880085697\" title=\"6-month chart of SDS\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&#038;P500)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&#038;p=D&#038;st=2011-12-21&#038;en=2012-06-21&#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=2011-12-21&#038;en=2012-06-21&#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=2011-12-21&#038;en=2012-06-21&#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=2011-12-21&#038;en=2012-06-21&#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=2011-12-21&#038;en=2012-06-21&#038;id=p15880085697\" title=\"6-month chart of CAT\" target=\"_blank\">CAT<\/a> (Caterpillar)<\/p>\n<p><strong>Commentary<\/strong><br \/>\nThe churn continues as <a href=\"http:\/\/drduru.com\/onetwentytwo\/2012\/06\/19\/t2108-update-120619\/\" target=\"_blank\">my &#8220;firm bullishness&#8221; from two days ago<\/a> quickly turns into increased caution. This period was so brief, I barely had a chance to expand my short-term bullish positions (I added a handful of JKS shares to my SSO shares and Siemens call options), and I instead find myself with more bearish ones, mainly in the form of more VXX call options and shares.<\/p>\n<p>T2108 was crushed on Thursday, dropping from 52% to 35% (directly above the 50DMA for T2108). The S&#038;P 500 dropped 2.2%, placing it below its 50DMA again and erasing my earlier bullishness. Note well that this sharp drop is what I would normally expect for the index to work off extremely overbought stochastics. If the index remains healthy, it will bounce back quickly. I am not optimistic in the short-term given the drop below the important support now turned resistance again at the 50DMA.<\/p>\n<p><ceneter><br \/>\n<figure id=\"attachment_12494\" aria-describedby=\"caption-attachment-12494\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_SP500.png\" alt=\"The S&amp;P 500 gets crushed underneath its 50DMA\" title=\"The S&amp;P 500 gets crushed underneath its 50DMA\" width=\"500\" height=\"350\" class=\"size-full wp-image-12494\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_SP500.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_SP500-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-12494\" class=\"wp-caption-text\">The S&P 500 gets crushed underneath its 50DMA<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Note how the S&#038;P 500 also fell below the previous resistance formed by the highs following May&#8217;s oversold period. The index will need to re-fight its way if it bounces from here. Ultimately, we should watch to see whether a trading range sustains itself between the 2011 high (in May) and the 2011 close.<\/p>\n<p>As I expected, volatility was crushed after the Fed announcement, but on Thursday it soared as if it was responding to pent-up demand. The VIX is now again knocking on the door of the critical 21 level.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_12495\" aria-describedby=\"caption-attachment-12495\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_VIX.png\" alt=\"VIX soars\" title=\"VIX soars\" width=\"500\" height=\"350\" class=\"size-full wp-image-12495\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_VIX.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_VIX-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-12495\" class=\"wp-caption-text\">VIX soars<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>This all adds up to a likely increase in risk aversion. For more details on my related thoughts see &#8220;<a href=\"http:\/\/seekingalpha.com\/article\/676771-the-japanese-yen-and-volatility-sit-at-the-cusp-of-renewed-risk-aversion\" target=\"_blank\">The Japanese Yen And Volatility Sit At The Cusp Of Renewed Risk Aversion<\/a>.&#8221; The Australian dollar further confirms the flee from risk. The currency plunged against the U.S. dollar and almost dropped back to parity after a very strong run. It maintained perfect resistance at the 2010\/2011 close.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_12497\" aria-describedby=\"caption-attachment-12497\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_AUDUSD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_AUDUSD.png\" alt=\"The Australian dollar plunges from resistance at the 2010\/2011 closes and heads back to parity\" title=\"The Australian dollar plunges from resistance at the 2010\/2011 closes and heads back to parity\" width=\"500\" height=\"350\" class=\"size-full wp-image-12497\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_AUDUSD.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_AUDUSD-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-12497\" class=\"wp-caption-text\">The Australian dollar plunges from resistance at the 2010\/2011 closes and heads back to parity<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>At this point, a lot of caution is warranted. The S&#038;P 500 has to climb above 50DMA resistance yet again for me to throw some caution to the wind. Even then, the additional resistance of the May highs from 2011 and 2012 await. Otherwise, I wait for another oversold reading.<\/p>\n<p>Finally, note that the cyclical indicator in Caterpillar (CAT) continues to flash red. The stock never benefited much from the previous rally, it remains negative for the year, and it has been unable to challenge that resistance since late May. CAT also had another sales report and analyst presentation this week that failed to impress the market.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_12499\" aria-describedby=\"caption-attachment-12499\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_CAT.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_CAT.png\" alt=\"Caterpillar, Inc. still waving the red flag\" title=\"Caterpillar, Inc. still waving the red flag\" width=\"500\" height=\"350\" class=\"size-full wp-image-12499\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_CAT.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_CAT-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-12499\" class=\"wp-caption-text\">Caterpillar, Inc. still waving the red flag<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><center><br \/>\n<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, SSO; long VXX calls, puts, and shares; long SI calls; long CAT, long JKS<\/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: 34.9% VIX Status: 20.1 &#8230; <a title=\"T2108 Update (June 21, 2012) &#8211; Caution Prevails Yet Again As Churn Returns\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120621\/\">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":[20,43,135,62],"tags":[308,310,64,63,65,226,1597,303,178],"class_list":["post-12492","post","type-post","status-publish","format-standard","hentry","category-forex","category-industrial-sector","category-stock-market-trading","category-technical-analysis","tag-audusd","tag-australian-dollar","tag-cat","tag-caterpillar-inc","tag-sp-500","tag-t2108","tag-technical-analysis","tag-vix","tag-volatility"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update (June 21, 2012) - Caution Prevails Yet Again As Churn Returns - 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\/06\/22\/t2108-update-120621\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (June 21, 2012) - Caution Prevails Yet Again As Churn Returns - 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: 34.9% VIX Status: 20.1 ... 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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: 34.9% VIX Status: 20.1 ... Read more","og_url":"https:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120621\/","og_site_name":"ONE-TWENTY TWO: Trading Financial Markets","article_published_time":"2012-06-22T07:08:02+00:00","article_modified_time":"2012-06-22T07:14:58+00:00","og_image":[{"url":"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120621_SP500.png","type":"","width":"","height":""}],"author":"Dr. Duru","twitter_card":"summary_large_image","twitter_creator":"@drduru","twitter_site":"@drduru","twitter_misc":{"Written by":"Dr. Duru","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120621\/#article","isPartOf":{"@id":"https:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120621\/"},"author":{"name":"Dr. Duru","@id":"https:\/\/drduru.com\/onetwentytwo\/#\/schema\/person\/d9569fde6c701b021a8d958f775be9a0"},"headline":"T2108 Update (June 21, 2012) &#8211; 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