{"id":15340,"date":"2012-11-19T22:37:25","date_gmt":"2012-11-20T06:37:25","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=15340"},"modified":"2012-11-19T22:46:20","modified_gmt":"2012-11-20T06:46:20","slug":"t2108-update-121119","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/11\/19\/t2108-update-121119\/","title":{"rendered":"T2108 Update (November 19, 2012) &#8211; A Powermove Statement, Oversold No More!"},"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>: 30.0% (ends previous oversold period at 3 days)<br \/>\n<strong>VIX Status<\/strong>: 15.2<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=$SPX&#038;p=D&#038;st=2012-05-19&#038;en=2012-11-19&#038;id=p14085208538\" title=\"6-month chart of the S&#038;P 500\" target=\"_blank\">S&#038;P 500<\/a> or <a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&#038;p=D&#038;st=2012-05-19&#038;en=2012-11-19&#038;id=p14085208538\" title=\"6-month chart of SPY\" target=\"_blank\">SPY<\/a><br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&#038;p=D&#038;st=2012-05-19&#038;en=2012-11-19&#038;id=p15880085697\" title=\"6-month chart of SDS\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&#038;P500)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&#038;p=D&#038;st=2012-05-19&#038;en=2012-11-19&#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=2012-05-19&#038;en=2012-11-19&#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=2012-05-19&#038;en=2012-11-19&#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=2012-05-19&#038;en=2012-11-19&#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=2012-05-19&#038;en=2012-11-19&#038;id=p15880085697\" title=\"6-month chart of CAT\" target=\"_blank\">CAT<\/a> (Caterpillar)<\/p>\n<p><strong>Commentary<\/strong><br \/>\nWow. Now THAT was an oversold bounce. T2108 jumped 10 percentage points to 30.0%, putting a dramatic end to the last oversold period. The S&#038;P 500 jumped 2.0% for a powermove that completed a bounce that started on Friday. The index made a major statement by even powering right through its 200DMA.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_15341\" aria-describedby=\"caption-attachment-15341\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_SP500.png\" alt=\"The S&amp;P 500 puts on a show\" title=\"The S&amp;P 500 puts on a show\" width=\"500\" height=\"350\" class=\"size-full wp-image-15341\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_SP500.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_SP500-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-15341\" class=\"wp-caption-text\">The S&P 500 puts on a show<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>I sold all my SSO calls soon after the open since I expected the 200DMA to hold as resistance. However, as promised, I held onto my SSO shares. While my strategy is based on waiting out the Fiscal Cliff yo-yo, it has now occurred to me that this tiered approach helps solve a problem I have had under-utilizing post-oversold rallies. Selling the calls allows me to lock in profits and to provide some cushion for taking the downside risk with the SSO shares. With the S&#038;P 500 closing above the 200DMA, I have to consider an imminent retest of the (downward sloping) 50DMA. For conservative traders who were waiting for a spike in the VIX, the choice buying opportunity has passed. For conservative traders waiting on T2108 to exit oversold conditions before buying, I advise waiting a little bit more to confirm that the 200DMA can hold.<\/p>\n<p>I am also holding onto my QQQ shares for now. Today&#8217;s leap seems to confirm <a href=\"http:\/\/drduru.com\/onetwentytwo\/2012\/11\/19\/t2108-update-121116\/\" target=\"_blank\">the bottoming pattern I noted on Friday<\/a>. Apple (AAPL) led the way bigtime for technology stocks. I ran out of time to write a post on the stock to quantify just how oversold it was. AAPL was a major rubber band waiting to snap back, but I certainly did not envision a SEVEN PERCENT one-day jump! (I sold a call spread a tad bit too early!) <\/p>\n<p><center><br \/>\n<figure id=\"attachment_15343\" aria-describedby=\"caption-attachment-15343\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_AAPL.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_AAPL.png\" alt=\"AAPL&#039;s revenge was impressive but a downtrend remains in place as defined by the 20DMA\" title=\"AAPL&#039;s revenge was impressive but a downtrend remains in place as defined by the 20DMA\" width=\"500\" height=\"350\" class=\"size-full wp-image-15343\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_AAPL.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/11\/121119_AAPL-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-15343\" class=\"wp-caption-text\">AAPL&#039;s revenge was impressive but a downtrend remains in place as defined by the 20DMA<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>AAPL last bounced this vigorously in response to April earnings with a 8.9% one-day surge. Just like today, AAPL ran right into a declining 20DMA. The downtrend that led to this bounce lasted much longer and was much steeper than April&#8217;s decline. I will be watching AAPL even more closely now. (Also note that before this year, the last time AAPL performed this well was a 7.7% jump on May 10, 2010. Before that? The 2008 panic produced five days ranging from 8.0 to 12.6%.)<\/p>\n<p>Finally, I am noting that Friday&#8217;s plunge in the VIX may have signaled today&#8217;s rally. Just as a big plunge in the VIX on August 2nd, seemed to signal a strong upward reaction to the monthly employment numbers reported the next day. Yes &#8211; I will soon be studying the numbers to discern whether a tradeable pattern has emerged here.<\/p>\n<p><strong>Daily T2108 vs the S&#038;P 500<\/strong><br \/>\n<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)\"><\/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 calls and shares, long VXX shares and puts, long QQQ, long AAPL shares and put spread<\/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 (November 19, 2012) &#8211; A Powermove Statement, Oversold No More!\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/11\/19\/t2108-update-121119\/\">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":[250,534,1065,535,65,446,226,1597,303,929,120],"class_list":["post-15340","post","type-post","status-publish","format-standard","hentry","category-stock-market-trading","category-technical-analysis","tag-aapl","tag-apple-inc","tag-powershares-qqq-trust","tag-qqq","tag-sp-500","tag-sso","tag-t2108","tag-technical-analysis","tag-vix","tag-volatilty","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 (November 19, 2012) - A Powermove Statement, Oversold No More! - 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\/11\/19\/t2108-update-121119\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (November 19, 2012) - A Powermove Statement, Oversold No More! - 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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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 ... 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