{"id":22341,"date":"2014-04-15T20:01:57","date_gmt":"2014-04-16T03:01:57","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=22341"},"modified":"2014-04-16T09:09:51","modified_gmt":"2014-04-16T16:09:51","slug":"t2108-update-140415","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2014\/04\/15\/t2108-update-140415\/","title":{"rendered":"T2108 Update (April 15, 2014) &#8211; A Perfect Bounce &#8211; Maybe Too Perfect"},"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 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>: 45.8%<br \/>\n<strong>VIX Status<\/strong>: 15.6<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Short (fade rallies). See caveats below.<br \/>\n<strong>Active T2108 periods<\/strong>: Day #196 over 20%, Day #48 over 40% (over-period), Day #4 under 50% (under-period), Day #4 under 60%, Day #8 under 70%<\/p>\n<p><strong>Reference Charts<\/strong> (click for view of last 6 months from Stockcharts.com):<br \/>\n<a title=\"6-month chart of the S&amp;P 5005\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$SPX&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p25615696567\" target=\"_blank\">U.S. Dollar Index<\/a> (volatility index)<br \/>\n<a title=\"6-month chart of EEM\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=EEM&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p15880085697\" target=\"_blank\">EEM<\/a> (iShares MSCI Emerging Markets)<br \/>\n<a title=\"6-month chart of the VIX\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$VIX&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p25615696567\" target=\"_blank\">VIX<\/a> (volatility index)<br \/>\n<a title=\"6-month chart of VXX\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=VXX&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p15880085697\" target=\"_blank\">VXX<\/a> (iPath S&amp;P 500 VIX Short-Term Futures ETN)<br \/>\n<a title=\"6-month chart of EWG\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=EWG&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p15880085697\" target=\"_blank\">EWG<\/a> (iShares MSCI Germany Index Fund)<br \/>\n<a title=\"6-month chart of CAT\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=CAT&amp;p=D&amp;st=2013-10-15&amp;en=2014-04-15&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nYou could not make this stuff up even if I tried&#8230;and I am guessing I will look back on April 15th, a day affectionately known as &#8220;tax day&#8221; in the U.S., as a pivotal trading day.<\/p>\n<p>The morning looked awful as sellers quickly reversed <a href=\"http:\/\/drduru.com\/onetwentytwo\/2014\/04\/15\/t2108-update-140414\/\" target=\"_blank\">the sharp pop that ended Monday&#8217;s trading and delivered the predicted oversold bounce<\/a>. As has become standard fare, the NASDAQ (QQQ) and its high-tech, high-flying, highly valued kin were some of the hardest hit by the selling. By the low of the day, the NASDAQ could see the whites of the eyes on the 200-day moving average (DMA). At that point, almost like magic, the buying kicked in. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_22347\" aria-describedby=\"caption-attachment-22347\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_NASDAQ.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_NASDAQ.png\" alt=\"The NASDAQ bounces perfectly off 200DMA support\" width=\"550\" height=\"375\" class=\"size-full wp-image-22347\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_NASDAQ.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_NASDAQ-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-22347\" class=\"wp-caption-text\">The NASDAQ bounces perfectly off 200DMA support<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The NASDAQ last touched its 200DMA around the start of 2013. That duration is a testimon to the strength of the rally. My main regret is that I could not be present to take a stab at playing such a momentous occasion.<\/p>\n<p>This bounce looks almost too perfect, but it matches well with a massive busting of stops at the intraday lows for the year (see the black, thick horizontal line). Assuming stops were taken out, a bunch of reluctant sellers may have just paved the way for a bunch of buyers eager to jump into the breach.<\/p>\n<p>Of course the buying helped the S&#038;P 500 (SPY) as well. The index surged right into its 50DMA resistance before trading closed for the day. Net-net, if it were not for that ominous 50DMA, the S&#038;P 500 would still look barely phased by the current selling. Compare and contrast: the NASDAQ has a noticeable &#8220;sag&#8221; from its recent 11-year or so high, creating a short-term downtrend. The S&#038;P 500 on the other hand has barely budged from the land of &#8220;churn&#8221; off its recent all-time highs.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_22346\" aria-describedby=\"caption-attachment-22346\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_SP500.png\" alt=\"The S&amp;P 500 bounces right back into its 50DMA as it becomes the stubborn index\" width=\"550\" height=\"375\" class=\"size-full wp-image-22346\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_SP500-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-22346\" class=\"wp-caption-text\">The S&#038;P 500 bounces right back into its 50DMA as it becomes the stubborn index<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>With T2108 coming off the 40% level and <a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140411_T2108.png\" target=\"_blank\">starting to form what looks like a series of higher lows<\/a>, it is time to take the foot off the pedal on bearishness. The sell-off has left a lot of overhead room for a fresh wave of buyers who want to snap up &#8220;bargains.&#8221; Accordingly, I am not adding to the small number of QQQ puts I bought Monday to fade the oversold bounce. (I sold my EEM puts into today&#8217;s selling). I will ride my recent nibbles on some momentum names. I will not look to fade again until the NASDAQ hits its now sharply downtrending 20DMA and\/or the S&#038;P 500 challenges all-time highs again.<\/p>\n<p>Finally, the VIX is showing signs it is topping out again. While it remains above the 15.35 pivot, it looks like it is running out of gas for this cycle. I am clinging tightly to my UVXY puts&#8230;<\/p>\n<p><center><br \/>\n<figure id=\"attachment_22348\" aria-describedby=\"caption-attachment-22348\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_VIX.png\" alt=\"The VIX may have already topped out for this cycle\" width=\"550\" height=\"375\" class=\"size-full wp-image-22348\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/04\/140415_VIX-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-22348\" class=\"wp-caption-text\">The VIX may have already topped out for this cycle<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><center><br \/>\n<strong>Daily T2108 vs the S&#038;P 500<\/strong><br \/>\n<img loading=\"lazy\" decoding=\"async\" title=\"T2108 vs. the S&amp;P 500 (DAILY)\" alt=\"T2108 vs. the S&amp;P 500 (DAILY)\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily_s.png\" width=\"500\" height=\"350\" \/><br \/>\n<\/center><\/p>\n<p>Black line: T2108 (measured on the right); Green line: S&amp;P 500 (for comparative purposes)<br \/>\nRed line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)<\/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\" title=\"Weekly T2108\" alt=\"Weekly T2108\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-weekly_s.png\" width=\"500\" height=\"350\" \/><br \/>\n*<strong>All charts created using <\/strong><\/a><strong><a title=\"Freestockcharts.com\" href=\"http:\/\/www.freestockcharts.com\/\" target=\"_blank\">freestockcharts.com<\/a><\/strong> unless otherwise stated<\/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&amp;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, long QQQ puts, long QID calls, long UVXY puts<\/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 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 are &#8230; <a title=\"T2108 Update (April 15, 2014) &#8211; A Perfect Bounce &#8211; Maybe Too Perfect\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2014\/04\/15\/t2108-update-140415\/\">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":[511,62],"tags":[413,535,65,362,226,1597,1092,303,178],"class_list":["post-22341","post","type-post","status-publish","format-standard","hentry","category-support","category-technical-analysis","tag-nasdaq","tag-qqq","tag-sp-500","tag-spy","tag-t2108","tag-technical-analysis","tag-uvxy","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 (April 15, 2014) - A Perfect Bounce - Maybe Too Perfect - 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\/2014\/04\/15\/t2108-update-140415\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (April 15, 2014) - A Perfect Bounce - Maybe Too Perfect - 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 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 are ... 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