{"id":13797,"date":"2012-08-29T18:21:26","date_gmt":"2012-08-30T01:21:26","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=13797"},"modified":"2012-08-29T18:36:44","modified_gmt":"2012-08-30T01:36:44","slug":"t2108-update-120829","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/08\/29\/t2108-update-120829\/","title":{"rendered":"T2108 Update (August 29, 2012) &#8211; Pavlovian Market Tap Dances Between Breakout and Breakdown"},"content":{"rendered":"<p>(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are highly likely to reverse. 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>: 67.7%<br \/>\n<strong>VIX Status<\/strong>: 17.1<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Hold.<\/p>\n<p><strong>Reference Charts<\/strong> (click for view of last 6 months from Stockcharts.com):<\/p>\n<p><a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$SPX&#038;p=D&#038;st=2012-03-01&#038;en=2012-08-24&#038;id=p14085208538\" title=\"6-month chart of the S&#038;P 500\" target=\"_blank\">S&#038;P 500<\/a> or <a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&#038;p=D&#038;st=2012-03-01&#038;en=2012-08-24&#038;id=p14085208538\" title=\"6-month chart of SPY\" target=\"_blank\">SPY<\/a><br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&#038;p=D&#038;st=2012-03-01&#038;en=2012-08-24&#038;id=p15880085697\" title=\"6-month chart of SDS\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&#038;P500)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&#038;p=D&#038;st=2012-03-01&#038;en=2012-08-24&#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=2012-03-01&#038;en=2012-08-24&#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=2012-03-01&#038;en=2012-08-24&#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=2012-03-01&#038;en=2012-08-24&#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=2012-03-01&#038;en=2012-08-24&#038;id=p15880085697\" title=\"6-month chart of CAT\" target=\"_blank\">CAT<\/a> (Caterpillar)<\/p>\n<p><strong>Commentary<\/strong><br \/>\nLast week, <a href=\"http:\/\/drduru.com\/onetwentytwo\/2012\/08\/25\/t2108-update-120824\/\" target=\"_blank\">the Pavlovian market jumping at another mention of old QE3 news<\/a>. This week, the Pavlovian market anxiously awaits word from Jackson Hole, Bernanke&#8217;s word specifically. For three straight days the S&#038;P 500 has swung in a tight range directly above support from the May, 2012 high. Directly above is the tantalizing line of resistance from 52-week highs which remains <a href=\"http:\/\/drduru.com\/onetwentytwo\/2012\/08\/21\/t2108-update-120821\/\" target=\"_blank\">the bearish scene of a false breakout<\/a>.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13798\" aria-describedby=\"caption-attachment-13798\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_SP500.png\" alt=\"S&amp;P 500 tap dances between a breakout and a breakdown\" title=\"S&amp;P 500 tap dances between a breakout and a breakdown\" width=\"500\" height=\"350\" class=\"size-full wp-image-13798\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_SP500.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_SP500-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13798\" class=\"wp-caption-text\">S&P 500 tap dances between a breakout and a breakdown<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>T2108 is also going nowhere, remaining between 65% and 69% since dropping out of overbought conditions a week ago. <\/p>\n<p>The VIX however is NOT sitting still. At 17 now, the VIX has steadily risen in a straight line from its lows on August 17th at 13.4. I am interpreting this move bearishly given the Australian dollar continues to break down. I have written numerous times demonstrating the convenient relationship between the Australian dollar and the S&#038;P 500. Today, the bearish divergence rose its ugly head again as AUD\/USD slid below its 200DMA, confirming the breakdown from the 50DMA just on Monday.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13801\" aria-describedby=\"caption-attachment-13801\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_AUDUSD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_AUDUSD.png\" alt=\"Australian dollar continues its slow meltdown\" title=\"Australian dollar continues its slow meltdown\" width=\"500\" height=\"350\" class=\"size-full wp-image-13801\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_AUDUSD.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120829_AUDUSD-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13801\" class=\"wp-caption-text\">Australian dollar continues its slow meltdown<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Given these technical setups, Jackson Hole could indeed deliver another one of those critical junctures, whether up or down. For the Australian dollar, I am making a small bet that it has one more bounce left before dropping back to parity against the U.S. dollar. For the S&#038;P 500, it is wait and see until support or resistance next breaks&#8230;and of course, since I think the Australian dollar will continue to slide downward, I think the S&#038;P 500 will eventually &#8220;have to&#8221; follow as well.<\/p>\n<p><strong>Daily T2108 vs the S&#038;P 500<\/strong><br \/>\nClick chart for extended view with S&#038;P 500 fully scaled vertically (updated at least once a week)<br \/>\n<a href=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily_extended.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 SSO puts, net long Australian dollar<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are highly likely to reverse. 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 &#8230; <a title=\"T2108 Update (August 29, 2012) &#8211; Pavlovian Market Tap Dances Between Breakout and Breakdown\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/08\/29\/t2108-update-120829\/\">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":[20,135,62],"tags":[308,310,448,65,226,1597,303,931],"class_list":["post-13797","post","type-post","status-publish","format-standard","hentry","category-forex","category-stock-market-trading","category-technical-analysis","tag-audusd","tag-australian-dollar","tag-rydex-currencyshares-australian-dollar-trust-etf","tag-sp-500","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 (August 29, 2012) - Pavlovian Market Tap Dances Between Breakout and Breakdown - 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\/08\/29\/t2108-update-120829\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (August 29, 2012) - Pavlovian Market Tap Dances Between Breakout and Breakdown - 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]. 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