{"id":23228,"date":"2014-07-08T17:11:58","date_gmt":"2014-07-09T00:11:58","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=23228"},"modified":"2014-07-08T22:17:22","modified_gmt":"2014-07-09T05:17:22","slug":"t2108-update-140708","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2014\/07\/08\/t2108-update-140708\/","title":{"rendered":"T2108 Update (July 8, 2014) – Overbought Officially Over As Momentum Accelerates to the Downside"},"content":{"rendered":"

<\/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 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>: 61.7%
\nVIX Status<\/strong>: 12.0 (fades hard into the close)
\nGeneral (Short-term) Trading Call<\/strong>: Hold. Stop for longs on the S&P 500 remains at 1962
\nActive T2108 periods<\/strong>: Day #252 over 20%, Day #104 over 40%, Day #31 over 60% (overperiod), Day #2 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)
\nEEM<\/a> (iShares MSCI Emerging Markets)
\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>
\n1962 on the S&P 500 is still holding…just barely. The current trading call holds with it.<\/p>\n


\n
\"The<\/a>
The S&P 500 is just barely hovering above the bearish trigger line at 1962<\/figcaption><\/figure>
\n<\/center><\/p>\n

T2108 plunged again and confirmed with an exclamation point the end of the last overbought period. NOW things get interesting. As I have explained in previous posts, I am VERY hesitant to switch to a bearish trading call even as the money to be made right now is on quick shorts of momentum and high multiple stocks. This tweet by my old trading mentor<\/a> underlines my hesitation (if the embedded tweet does not work for you, click the link and look at his news feed for July 8th):<\/p>\n

<\/p>\n
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$SABR<\/a> has had quite a string of NR7s over the last week (5 in a row) while forming a pennant. A true coiled spring. http:\/\/t.co\/rvVy8QG2I5<\/a><\/p>\n

— Michael Seneadza (@TraderMike) July 8, 2014<\/a><\/p><\/blockquote>\n