{"id":18462,"date":"2013-06-18T18:17:17","date_gmt":"2013-06-19T01:17:17","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=18462"},"modified":"2013-06-18T18:24:07","modified_gmt":"2013-06-19T01:24:07","slug":"t2108-update-130618","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2013\/06\/18\/t2108-update-130618\/","title":{"rendered":"T2108 Update (June 18, 2013) – Early Breakout"},"content":{"rendered":"

(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<\/a>. You can follow real-time T2108 commentary<\/a> on twitter using the #T2108 hashtag. T2108-related trades and other trades are posted on twitter using the #120trade hashtag<\/a>)<\/p>\n

T2108 Status<\/strong>: 43.7%
\nVIX Status<\/strong>: 16.6
\nGeneral (Short-term) Trading Call<\/strong>: Play the wedge breakout (go long)
\nActive T2108 periods<\/strong>: Day #1 over 40% (underperiod), Day #18 under 70% (underperiod)<\/p>\n

Reference Charts<\/strong> (click for view of last 6 months from Stockcharts.com):
\nS&P 500<\/a> or SPY<\/a>
\nSDS<\/a> (ProShares UltraShort S&P500)
\nU.S. Dollar Index<\/a> (volatility index)
\nVIX<\/a> (volatility index)
\nVXX<\/a> (iPath S&P 500 VIX Short-Term Futures ETN)
\nEWG<\/a> (iShares MSCI Germany Index Fund)
\nCAT<\/a> (Caterpillar)<\/p>\n

Commentary<\/strong>
\nThe S&P 500 (SPY) has managed to break out ahead of schedule. In previous posts, I noted that I expected the wedge pattern in the index to breakout or breakdown this week. I thought the Federal Reserve meeting would deliver the catalyst but perhaps market participants are trying to get a head start on Bernanke’s effort to dispel the manufactured panic making the rounds over “bond tapering.”<\/p>\n


\n
\"The<\/a>
The S&P 500 breaks out of its wedge and ends the short-term downtrend<\/figcaption><\/figure>
\n<\/center><\/p>\n

This breakout also ends the short-term downtrend on the S&P 500 formed from the major reversal pattern on May 22nd. With the 50DMA tested successfully once again, the index is printing a very bullish pattern overall. T2108 is 43.7%, so plenty<\/strong> of room exists to the upside for a fresh market rally.<\/p>\n

The last piece of the puzzle will be the volatility index, the VIX. Currently, it remains elevated above the key pivot area around 15.2. I am assuming the VIX is only this high because of lingering uncertainty about the Fed’s coming announcement. After some initial churn, I am also assuming the VIX will plunge post-Fed. A close below 15.2 will seal the deal on the bullish short-term outlook for the S&P 500.<\/p>\n

In other news, a roundtrip on a Google (GOOG) call option worked again. I did not announce this trade as it is part of some testing. A bullish S&P 500 makes me even more bullish on buying the dips in GOOG.<\/p>\n


\nDaily T2108 vs the S&P 500<\/strong>
\n\"T2108<\/p>\n

Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
\nRed line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)<\/center><\/p>\n


\nWeekly T2108<\/strong>
\n\"Weekly
\n*All charts created using <\/strong><\/a>freestockcharts.com<\/a><\/strong> unless otherwise stated<\/center><\/p>\n

Related links:<\/strong>
\nThe T2108 Resource Page<\/a>
\nExpanded daily chart of T2108 versus the S&P 500<\/a>
\nExpanded weekly chart of T2108 <\/a><\/p>\n

Be careful out there!<\/p>\n

Full disclosure: no positions<\/p>\n","protected":false},"excerpt":{"rendered":"

(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 … 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":[599],"tags":[231,230,65,226,303,178],"class_list":["post-18462","post","type-post","status-publish","format-standard","hentry","category-internet","tag-goog","tag-google","tag-sp-500","tag-t2108","tag-vix","tag-volatility"],"yoast_head":"\nT2108 Update (June 18, 2013) - Early Breakout - 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\/2013\/06\/18\/t2108-update-130618\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (June 18, 2013) - Early Breakout - 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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