{"id":12508,"date":"2012-06-22T22:25:57","date_gmt":"2012-06-23T02:25:57","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=12508"},"modified":"2012-06-22T22:27:26","modified_gmt":"2012-06-23T02:27:26","slug":"t2108-update-120622","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120622\/","title":{"rendered":"T2108 Update (June 22, 2012) &#8211; Stop and Go Traffic"},"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>: 39.6%<br \/>\n<strong>VIX Status<\/strong>: 18.1<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=$SPX&#038;p=D&#038;st=2011-12-22&#038;en=2012-06-22&#038;id=p14085208538\" title=\"6-month chart of the S&#038;P 500\" target=\"_blank\">S&#038;P 500<\/a> or <a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&#038;p=D&#038;st=2011-12-22&#038;en=2012-06-22&#038;id=p14085208538\" title=\"6-month chart of SPY\" target=\"_blank\">SPY<\/a><br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&#038;p=D&#038;st=2011-12-22&#038;en=2012-06-22&#038;id=p15880085697\" title=\"6-month chart of SDS\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&#038;P500)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&#038;p=D&#038;st=2011-12-22&#038;en=2012-06-22&#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=2011-12-22&#038;en=2012-06-22&#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=2011-12-22&#038;en=2012-06-22&#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=2011-12-22&#038;en=2012-06-22&#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=2011-12-22&#038;en=2012-06-22&#038;id=p15880085697\" title=\"6-month chart of CAT\" target=\"_blank\">CAT<\/a> (Caterpillar)<\/p>\n<p><strong>Commentary<\/strong><br \/>\nWhen the volatility index becomes itself very volatile, you know it is time to take a pause, step back, and view the market from a larger angle. Friday&#8217;s 9.% plunge in the VIX erased almost 2\/3 of the previous day&#8217;s gains. Suddenly, the volatility index looks a LOT less dangerous than it did when I wrote <a href=\"http:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120621\/\" target=\"_blank\">the last T2108 Update<\/a>. <\/p>\n<p>I would describe the current churn as &#8220;stop and go traffic.&#8221; Just when I think the market is heading somewhere, I have to apply the brakes and reassess. There are two fundamental truths in the S&#038;P 500 chart: (1) the downtrend from the 52-week highs remains in place, and (2) the uptrend from the June lows, as supported by the 200DMA, also remains intact. This is a formula for range-bound trading. Only a decisive break in either direction will generate cleaner and clearer trading opportunities.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_12511\" aria-describedby=\"caption-attachment-12511\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_SP500.png\" alt=\"The S&amp;P 500 remains well-contained within trend lines and important levels from 2011\" title=\"The S&amp;P 500 remains well-contained within trend lines and important levels from 2011\" width=\"500\" height=\"350\" class=\"size-full wp-image-12511\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_SP500.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_SP500-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-12511\" class=\"wp-caption-text\">The S&P 500 remains well-contained within trend lines and important levels from 2011<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>T2108 is currently trading at a higher range, bouncing between 30-50% over the last six trading days. This is essentially limbo: T2108 cannot communicate any new information bouncing around in here.<\/p>\n<p>Reviewing the market from a larger angle, it seems clear that I need to simplify the trading strategy&#8230;starting with reducing it. Next, I will focus almost exclusively on major indices. Individual stocks will only make sense AFTER some major news announcement. I am particularly mindful that earnings season is again around the corner and the possibilities loom for major earnings warnings.<\/p>\n<p>One stock that continues to benefit from good news flow is First Solar (FSLR). It continues to trend upward and for a brief moment finally punched through its 50DMA. The fade to close the day placed the stock directly under this resistance (no, you cannot make this stuff up!). I sold call options into today&#8217;s 9.2% jump. FSLR is now 34.9% off its all-time lows (of course, it is still a complete disaster overall).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_12512\" aria-describedby=\"caption-attachment-12512\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_FSLR.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_FSLR.png\" alt=\"FSLR continues to fight its way upward. This time, stopping at stiff resistance from the 50DMA.\" title=\"FSLR continues to fight its way upward. This time, stopping at stiff resistance from the 50DMA.\" width=\"500\" height=\"350\" class=\"size-full wp-image-12512\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_FSLR.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/06\/120622_FSLR-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-12512\" class=\"wp-caption-text\">FSLR continues to fight its way upward. This time, stopping at stiff resistance from the 50DMA.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Today&#8217;s fresh plunge pushed VXX toward its all-time lows; perhaps a triple bottom is not in the cards after all! VXX gave up its entire 11.1% gain from Thursday. The recent trading in VXX has indicated to me that there could be good profit in trading puts against shares. I have already completed two rounds of successful trades in weekly puts. The idea here is to hold a small amount of shares in the case of a large pop &#8211; I am now assuming the market is at higher risk of selling off sharply at any time &#8211; but in general, aggressively press bets that VXX is returning to its long-term, secular decline. This is an experiment, and I will need to end it if I have to trade excessively or too aggressively to maintain profitability.<\/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 FSLR<\/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: 39.6% VIX Status: 18.1 &#8230; <a title=\"T2108 Update (June 22, 2012) &#8211; Stop and Go Traffic\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/06\/22\/t2108-update-120622\/\">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":[32,135,62,982],"tags":[6,7,155,65,226,1597,303,120],"class_list":["post-12508","post","type-post","status-publish","format-standard","hentry","category-options","category-stock-market-trading","category-technical-analysis","category-trading-range","tag-first-solar","tag-fslr","tag-options-trading","tag-sp-500","tag-t2108","tag-technical-analysis","tag-vix","tag-vxx"],"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 22, 2012) - Stop and Go Traffic - 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-120622\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (June 22, 2012) - Stop and Go Traffic - 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: 39.6% VIX Status: 18.1 ... 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