{"id":26450,"date":"2015-01-11T23:01:32","date_gmt":"2015-01-12T07:01:32","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=26450"},"modified":"2015-01-11T23:04:20","modified_gmt":"2015-01-12T07:04:20","slug":"t2108-update-150109","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/11\/t2108-update-150109\/","title":{"rendered":"T2108 Update (January 9, 2015) &#8211; A Perfect Pause for the S&#038;P 500"},"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>: 45.5%<br \/>\n<strong>T2107 Status<\/strong>: 45.6%<br \/>\n<strong>VIX Status<\/strong>: 17.6<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Hold<br \/>\n<strong>Active T2108 periods<\/strong>: Day #57 over 20%, Day #16 above 30%, Day #3 above 40% (overperiod), Day #7 under 50%, Day #25 under 60%, Day #127 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=$SPX&amp;p=D&amp;st=2014-07-09&amp;en=2015-01-09&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2014-07-09&amp;en=2015-01-09&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2014-07-09&amp;en=2015-01-09&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2014-07-09&amp;en=2015-01-09&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=2014-07-09&amp;en=2015-01-09&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=2014-07-09&amp;en=2015-01-09&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=2014-07-09&amp;en=2015-01-09&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=2014-07-09&amp;en=2015-01-09&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=2014-07-09&amp;en=2015-01-09&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nAs I so often say, you just cannot make this stuff up. The S&#038;P 500 pulled back from Thursday&#8217;s breakout move to rest perfectly on top of its 50-day moving average (DMA).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26451\" aria-describedby=\"caption-attachment-26451\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500.png\" alt=\"The S&amp;P 500 comes to a perfect rest on top of its 50DMA\" width=\"550\" height=\"375\" class=\"size-full wp-image-26451\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26451\" class=\"wp-caption-text\">The S&#038;P 500 comes to a perfect rest on top of its 50DMA<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>This sets up a great buying point for bulls. The HUGE caveat is that another earnings season is upon us, and the market is now subject to more headline &#8220;risk&#8221; than usual. T2108 remains in essentially a neutral position at 45.5% and cannot help us decide whether to expect a bullish or bearish period ahead.<\/p>\n<p>One interesting thing to note: the 70% underperiod is now at 127 days and has become exceptionally long relative to history. Granted, one could argue that T2108 &#8220;essentially&#8221; hit overbought on November 26th at 69.99%. However, sticking to the strict definition, the chart below suggests that the range of potential performances for the S&#038;P 500 by the time it returns to overbought territory has become very wide.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26453\" aria-describedby=\"caption-attachment-26453\" style=\"width: 461px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500Perf_T2108Under70Pct.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500Perf_T2108Under70Pct.png\" alt=\"The duration of the current T2108 70% underperiod is exceptionally long compared to the historical record\" width=\"471\" height=\"281\" class=\"size-full wp-image-26453\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500Perf_T2108Under70Pct.png 471w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_SP500Perf_T2108Under70Pct-300x179.png 300w\" sizes=\"auto, (max-width: 471px) 100vw, 471px\" \/><\/a><figcaption id=\"caption-attachment-26453\" class=\"wp-caption-text\">The duration of the current T2108 70% underperiod is exceptionally long compared to the historical record<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The S&#038;P 500 was last overbought on July 3rd and has gained 3.0% since then. This performance is slightly above where we would expect it to be if the S&#038;P 500 were to become overbought again. My best guess is that the S&#038;P 500 will be lower by the time it gets back to overbought territory: this supports my on-going assumption that the S&#038;P 500 will chop around for a good amount of time going forward.<\/p>\n<p>The volatility index, the VIX, jumped up slightly. As I stated earlier, I think the onset of earnings season will help keep volatility elevated so I am not being aggressive in fading volatility here. I have a few puts on ProShares Ultra VIX Short-Term Futures (UVXY) in case the slide in volatility continues. Otherwise, I am saving powder for my favorite volatility fade, ProShares Short VIX Short-Term Futures (SVXY), for the next extreme move. I sold my last tranche of SVXY on the previous day (not eager to hold for too long given my short-term volatility expectations).<\/p>\n<p>While I made a good trade on SVXY on Thursday, I whiffed on a significant one in Conns Inc. (CONN). <a href=\"http:\/\/drduru.com\/onetwentytwo\/2014\/12\/24\/conns-triggers-a-trade\/\" target=\"_blank\">I wrote about this trade on December 24, 2014<\/a>. It paid off in a big way on Thursday when the stock soared as much as 19.6% in the wake of December sales news. The move was fast: the entire 19.6% gain came in 10 minutes. The fade was slow enough to keep me expecting a rebound at anytime. Before I knew it, the ENTIRE move was gone. Poof. The stock is now struggling to keep from going negative post-sales release.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_26455\" aria-describedby=\"caption-attachment-26455\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_CONN.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_CONN.png\" alt=\"One of the more vicious one-day fades you will ever see in a stock!\" width=\"550\" height=\"375\" class=\"size-full wp-image-26455\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_CONN.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/01\/150109_CONN-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-26455\" class=\"wp-caption-text\">One of the more vicious one-day fades you will ever see in a stock!<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The options part of the trade expires this Friday. If I had been smarter\/faster, I would have sold the long call position immediately, but I was trying to ride the gains. Now, it seems more likely I will end the week more or less flat and facing a decision as to whether to try this trade one more time. I hope the action in the options pits provide clues once again.<\/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 9, 2015) &#8211; A Perfect Pause for the S&#038;P 500\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/01\/11\/t2108-update-150109\/\">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":[32,338,1154,62],"tags":[1457,1460,155,65,1363,226,1597,1092,303,178],"class_list":["post-26450","post","type-post","status-publish","format-standard","hentry","category-options","category-retail","category-t2108-model","category-technical-analysis","tag-conn","tag-conns-inc","tag-options-trading","tag-sp-500","tag-svxy","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 (January 9, 2015) - A Perfect Pause for the S&amp;P 500 - 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\/11\/t2108-update-150109\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (January 9, 2015) - A Perfect Pause for the S&amp;P 500 - 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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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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