{"id":26407,"date":"2015-01-07T22:34:23","date_gmt":"2015-01-08T06:34:23","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=26407"},"modified":"2015-01-07T22:37:41","modified_gmt":"2015-01-08T06:37:41","slug":"t2108-update-150107","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/07\/t2108-update-150107\/","title":{"rendered":"T2108 Update (January 7, 2015) &#8211; A Bottoming Already Underway?!"},"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 sometimes posted on twitter using <a href=\"http:\/\/twitter.com\/#!\/search\/%23120trade\" target=\"_blank\">the #120trade hashtag<\/a>. T2107 measures the percentage of stocks trading above their respective 200DMAs)<\/p>\n<p><strong>T2108 Status<\/strong>: 40.4% (ended quasi-oversold period with a gain against a predicted 71% odds of a decline)<br \/>\n<strong>T2107 Status<\/strong>: 45.4%<br \/>\n<strong>VIX Status<\/strong>: 19.3 (gapped down and lost 8.6%)<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Hold &#8211; see caveats below<br \/>\n<strong>Active T2108 periods<\/strong>: Day #55 over 20%, Day #14 above 30%, Day #1 above 40% (overperiod), Day #5 under 50%, Day #23 under 60%, Day #125 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=$SPX&amp;p=D&amp;st=2014-07-07&amp;en=2015-01-07&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2014-07-07&amp;en=2015-01-07&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2014-07-07&amp;en=2015-01-07&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2014-07-07&amp;en=2015-01-07&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=2014-07-07&amp;en=2015-01-07&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=2014-07-07&amp;en=2015-01-07&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=2014-07-07&amp;en=2015-01-07&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=2014-07-07&amp;en=2015-01-07&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=2014-07-07&amp;en=2015-01-07&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nJust <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/01\/06\/t2108-update-150106\/\" target=\"_blank\">as I was bracing for more losses<\/a>, the stock market of course threw a surprise. The S&#038;P 500 gapped up and gained 1.2% to reverse all of the previous day&#8217;s losses while bouncing off &#8220;support&#8221; from the start of the Santa Claus rally. T2108 surged over the 40% threshold. Perhaps most importantly, the volatility index, the VIX, gapped down for a 8.6% loss. Suddenly, I now have to consider that a bottoming process from the latest pullback may already be underway.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26412\" aria-describedby=\"caption-attachment-26412\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SP500.png\" alt=\"The S&amp;P 500 launches off the starting point for the Santa Claus rally\" width=\"550\" height=\"375\" class=\"size-full wp-image-26412\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26412\" class=\"wp-caption-text\">The S&#038;P 500 launches off the starting point for the Santa Claus rally<\/figcaption><\/figure><\/p>\n<p><figure id=\"attachment_26411\" aria-describedby=\"caption-attachment-26411\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_VIX.png\" alt=\"The volatility index gaps down - likely bringing the latest up-cycle to an end\" width=\"550\" height=\"375\" class=\"size-full wp-image-26411\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26411\" class=\"wp-caption-text\">The volatility index gaps down &#8211; likely bringing the latest up-cycle to an end<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Before I continue, I need to point out something I completely missed from <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/01\/06\/t2108-update-150106\/\" target=\"_blank\">the previous day&#8217;s close<\/a>. I showed how the S&#038;P 500 was rebounding nicely off its lows in tight concert with my favorite indicator from the currency market, the Australian dollar (FXA) versus the Japanese yen (JPY), or AUD\/JPY. However, I completely missed the strange nature of the close in the final minutes. As usual, I have to use SPY to make it plain as the open and close on the S&#038;P 500 do not do the trading action any justice. <\/p>\n<p>In the 15-minute chart below, SPY started a sudden reversal at 3:30pm Eastern. Volume surged as it often (usually?) does in the final 15 minutes. I include today&#8217;s trading for comparison. Note how the gap up in SPY started trading as if the previous 30 minutes never happened. It was if someone (or some people) were forced out (washed out) into the close. If I had noticed the potential purge, I would have been a little more hopeful for a positive day of trading despite the T2108 Trading Model&#8217;s prediction for a down day.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26408\" aria-describedby=\"caption-attachment-26408\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SPY-15min.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SPY-15min.png\" alt=\"SPY gaps up and immediately erases the impact of the previous day&#039;s closing action\" width=\"550\" height=\"375\" class=\"size-full wp-image-26408\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SPY-15min.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_SPY-15min-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26408\" class=\"wp-caption-text\">SPY gaps up and immediately erases the impact of the previous day&#8217;s closing action<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The strongest case for a bottoming comes from AUD\/JPY. Note that just like the December low, AUD\/JPY broke down below the 200DMA and jumped right back over it the following day.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26410\" aria-describedby=\"caption-attachment-26410\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_AUDJPY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_AUDJPY.png\" alt=\"The Australian dollar sharply reverses its breakdown against the Japanese yen\" width=\"550\" height=\"375\" class=\"size-full wp-image-26410\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_AUDJPY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_AUDJPY-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26410\" class=\"wp-caption-text\">The Australian dollar sharply reverses its breakdown against the Japanese yen<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>My favorite stock indicator Caterpillar, Inc. (CAT) is even winking at a bottom. The stock printed a hammer pattern the previous day and confirmed the bottoming pattern opening higher (ever so slightly) and finishing with a gain on high volume. This puts in play at least a fill of Monday&#8217;s calamitous gap down and plunge.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26417\" aria-describedby=\"caption-attachment-26417\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_CAT.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_CAT.png\" alt=\"Caterpillar (CAT) prints a bottoming pattern\" width=\"550\" height=\"375\" class=\"size-full wp-image-26417\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_CAT.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_CAT-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26417\" class=\"wp-caption-text\">Caterpillar (CAT) prints a bottoming pattern<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Finally, it is interesting to note how the S&#038;P 500 is still &#8220;loitering&#8221; around the levels it traded when the Bank of Japan pumped up its program of quantitative easing and soon thereafter China cut rates. And now the support line from the Santa Claus rally may even prove important for trading in the near-term.<\/p>\n<p>Since <a href=\"http:\/\/drduru.com\/onetwentytwo\/2014\/12\/01\/t2108-update-141201\/\" target=\"_blank\">I am expecting an extended period of chop<\/a>, I am not getting overly excited. Note that the S&#038;P 500 must now contend all over again with overhead resistance at the 50DMA. Bulls have a very clear stop below January&#8217;s low. Bears need to look out for yet another downside fake-out.<\/p>\n<p>Speaking of bottoms, I have become VERY intrigued by gold&#8217;s ability to consolidate in the last two months even as the U.S. dollar index has soared about 7%. I am definitely NOT going to call a bottom in gold, but it is definitely tradeable to the long side here (with stops in place adjusted to risk tolerance of course). If <a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=GLD&#038;p=D&#038;st=2014-07-07&#038;en=2015-01-07&#038;id=p14085208538\" target=\"_blank\">SPDR Gold Trust (GLD)<\/a> manages to breakout from its 200DMA (another 4% higher), I might even have to turn full out bullish (for the short-term).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26414\" aria-describedby=\"caption-attachment-26414\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_GLDvsDXY0.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_GLDvsDXY0.png\" alt=\"SPDR Gold Trust (GLD) is flatline since the end of October even as the U.S. dollar has soared 7%. Gold may actually have begun to bottom here and is likely tradeable from the long side\" width=\"550\" height=\"375\" class=\"size-full wp-image-26414\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_GLDvsDXY0.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150107_GLDvsDXY0-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26414\" class=\"wp-caption-text\">SPDR Gold Trust (GLD) is flatline since the end of October even as the U.S. dollar has soared 7%. Gold may actually have begun to bottom here and is likely tradeable from the long side<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>Daily T2108 vs the S&amp;P 500<\/strong><br \/>\n<img loading=\"lazy\" decoding=\"async\" title=\"T2108 vs. the S&amp;P 500 (DAILY)\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily_s.png\" alt=\"\" width=\"500\" height=\"350\" \/><\/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%)<\/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\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-weekly_s.png\" alt=\"Weekly T2108\" 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><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 GLD, net short Australian dollar and Japanese yen, net long U.S. dollar, long SVXY, long UVXY put options<\/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 (January 7, 2015) &#8211; A Bottoming Already Underway?!\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/07\/t2108-update-150107\/\">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":[1303,199,20,43,62,21],"tags":[772,310,64,63,299,200,24,138,65,499,362,226,1597,1591,303,931],"class_list":["post-26407","post","type-post","status-publish","format-standard","hentry","category-bottom","category-commodities","category-forex","category-industrial-sector","category-technical-analysis","category-u-s-dollar","tag-audjpy","tag-australian-dollar","tag-cat","tag-caterpillar-inc","tag-dxy0","tag-gld","tag-gold","tag-japanese-yen","tag-sp-500","tag-spdr-gold-trust","tag-spy","tag-t2108","tag-technical-analysis","tag-u-s-dollar","tag-vix","tag-volatility-index"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update (January 7, 2015) - A Bottoming Already Underway?! - 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\/2015\/01\/07\/t2108-update-150107\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (January 7, 2015) - A Bottoming Already Underway?! - 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]. 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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