{"id":23047,"date":"2014-06-24T18:28:37","date_gmt":"2014-06-25T01:28:37","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=23047"},"modified":"2014-06-24T18:28:37","modified_gmt":"2014-06-25T01:28:37","slug":"t2108-update-140624","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2014\/06\/24\/t2108-update-140624\/","title":{"rendered":"T2108 Update (June 24, 2014) &#8211; Stall Speed: Overbought Period Ends"},"content":{"rendered":"<p><code><\/code>(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>: 66.6% (end a 4-day overbought period)<br \/>\n<strong>VIX Status<\/strong>: 12.1<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Even aggressive traders hold. Longs still stop below 1940 on the S&#038;P 500<br \/>\n<strong>Active T2108 periods<\/strong>: Day #243 over 20%, Day #95 over 40%, Day #22 over 60% (overperiod), Day #1 under 70% (underperiod)<\/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=$SPX&amp;p=D&amp;st=2013-12-24&amp;en=2014-06-24&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2013-12-24&amp;en=2014-06-24&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2013-12-24&amp;en=2014-06-24&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2013-12-24&amp;en=2014-06-24&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=2013-12-24&amp;en=2014-06-24&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=2013-12-24&amp;en=2014-06-24&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=2013-12-24&amp;en=2014-06-24&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=2013-12-24&amp;en=2014-06-24&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=2013-12-24&amp;en=2014-06-24&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nT2108 ended a very lacluster 4-day overbought period with a close at 66.6%. The extended overbought rally that I expected never even opened its eyes. Looking back, I feel very fortunate <a href=\"http:\/\/drduru.com\/onetwentytwo\/2014\/06\/23\/t2108-update-140623\/\" target=\"_blank\">I made some good trades in individual stocks during the overbought period<\/a>.<\/p>\n<p>The dip in the S&#038;P 500 (SPY) has a very classic bearish pattern: three days of indecisive trading followed by a pullback that easily wipes away the paltry gains of all three days. However, I am sticking with the original bearish trigger of a close below 1940 on the S&#038;P 500. The market is moving in such slow motion that I think patience is warranted. The potential for getting trades chopped up in market churn remains high until the market somehow delivers a more clear directional signal. Moreover, <a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140623_T2108-weekly.png\" target=\"_blank\">the higher lows on T2108<\/a> suggest that the next pullback will be quite shallow.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_23049\" aria-describedby=\"caption-attachment-23049\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_SP500.png\" alt=\"The S&amp;P 500 takes an ominous tumble out of overbought conditions\" width=\"550\" height=\"375\" class=\"size-full wp-image-23049\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_SP500-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23049\" class=\"wp-caption-text\">The S&#038;P 500 takes an ominous tumble out of overbought conditions<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The volatility index, the VIX, DID open its eyes, apparently waking from a deep slumber. It rose a healthy 10.4% in a move that should perk up the bears. <\/p>\n<p>Under &#8220;normal&#8221; conditions, I would rush to buy puts on ProShares Ultra S&#038;P500 (SSO) and\/or PowerShares QQQ (QQQ) with this combination of signals. Again, I do not see a need to rush. If I find an individual stock with a good technical setup below resistance, I might try to short it for a quick trade. But that is as far as I will go on new trades. Note I DO think the bullish setups I noted in <a href=\"http:\/\/drduru.com\/onetwentytwo\/2014\/06\/23\/t2108-update-140623\/\" target=\"_blank\">the last T2108 Update<\/a> are already on probation given the way the NASDAQ (QQQ) faded from fresh multi-year highs. This kind of false breakout is typically a very bearish sign. I prefer to have the wind behind my back, especially when dealing with high-multiple and\/or (former) momentum stocks.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_23051\" aria-describedby=\"caption-attachment-23051\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_NASDAQ.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_NASDAQ.png\" alt=\"The NASDAQ suffers a false breakout with a bearish fade\" width=\"550\" height=\"375\" class=\"size-full wp-image-23051\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_NASDAQ.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_NASDAQ-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23051\" class=\"wp-caption-text\">The NASDAQ suffers a false breakout with a bearish fade<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Finally, here is an interesting contrast to the gathering bearish clouds. Wix.com (WIX) cleanly broke out above its 50DMA with high buying volume. This is one stock I am going to try to hold. It is even a fresh buy here with a stop below the 50DMA.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_23050\" aria-describedby=\"caption-attachment-23050\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_WIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_WIX.png\" alt=\"Buyers step up on Wix.com\" width=\"550\" height=\"375\" class=\"size-full wp-image-23050\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_WIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2014\/06\/140624_WIX-300x204.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-23050\" class=\"wp-caption-text\">Buyers step up on Wix.com<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><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 WIX<\/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 (June 24, 2014) &#8211; Stall Speed: Overbought Period Ends\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2014\/06\/24\/t2108-update-140624\/\">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":[483,599,490,62],"tags":[65,226,1597,303,178,1368,1367],"class_list":["post-23047","post","type-post","status-publish","format-standard","hentry","category-breakdown","category-internet","category-overbought","category-technical-analysis","tag-sp-500","tag-t2108","tag-technical-analysis","tag-vix","tag-volatility","tag-wix","tag-wix-com"],"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 24, 2014) - Stall Speed: Overbought Period Ends - 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\/06\/24\/t2108-update-140624\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (June 24, 2014) - Stall Speed: Overbought Period Ends - 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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