{"id":28232,"date":"2015-05-06T00:57:30","date_gmt":"2015-05-06T07:57:30","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=28232"},"modified":"2015-05-09T14:30:04","modified_gmt":"2015-05-09T21:30:04","slug":"t2108-update-150505","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/05\/06\/t2108-update-150505\/","title":{"rendered":"T2108 Update (May 5, 2015) &#8211; Broken Record: Chopfest Continues"},"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 occasionally 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>: 56.9%<br \/>\n<strong>T2107 Status<\/strong>: 56.0%<br \/>\n<strong>VIX Status<\/strong>: 13.4<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Neutral.<br \/>\n<strong>Active T2108 periods<\/strong>: Day #136 over 20%, Day #95 above 30%, Day #39 above 40% (overperiod), Day #1 under 50% (underperiod), Day #5 under 60%, Day #205 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 500\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$SPX&amp;p=D&amp;st=2014-11-05&amp;en=2015-05-05&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2014-11-05&amp;en=2015-05-05&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2014-11-05&amp;en=2015-05-05&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2014-11-05&amp;en=2015-05-05&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=2014-11-05&amp;en=2015-05-05&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=2014-11-05&amp;en=2015-05-05&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=2014-11-05&amp;en=2015-05-05&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=2014-11-05&amp;en=2015-05-05&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=2014-11-05&amp;en=2015-05-05&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nI have almost felt like a broken record since November\/December whenever I note that the S&#038;P 500 (SPY) is trading in a chopfest. Yet, &#8220;chopfest&#8221; is exactly the perfect description for this trading action even as the index steadily creeps higher along its 50DMA support.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28233\" aria-describedby=\"caption-attachment-28233\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_SP500.png\" alt=\"The S&amp;P 500 has gone almost nowhere since the chopfest began in November - yet the uptrend from the 50DMA has lasted the entire time\" width=\"550\" height=\"375\" class=\"size-full wp-image-28233\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28233\" class=\"wp-caption-text\">The S&#038;P 500 has gone almost nowhere since the chopfest began in November &#8211; yet the uptrend from the 50DMA has lasted the entire time<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>During this chopfest, volatility has made some big moves. However, for almost three months, volatility has remained relatively mute. It is very easy to get lulled asleep here, but I would say volatility is becoming a coiled spring at this point. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_28236\" aria-describedby=\"caption-attachment-28236\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_VIX.png\" alt=\"Is the VIX coiling for another jump higher?\" width=\"550\" height=\"375\" class=\"size-full wp-image-28236\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28236\" class=\"wp-caption-text\">Is the VIX coiling for another jump higher?<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Although the S&#038;P 500&#8217;s 1.2% decline just reversed Friday&#8217;s one-day surge, T2108 has moved to a fresh 5-week low. At 44.6%, I find myself thinking about oversold conditions again&#8230;and I know NOT to get too excited. Yet, the extended decline of T2108 relative to the S&#038;P 500 has me wondering whether a bigger breakdown is finally around the corner. I have not yet acted on this suspicion.<\/p>\n<p>The 50DMA has also acted as support and a magnet for the NASDAQ (QQQ). The trading has been better-behaved than on the S&#038;P 500.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28234\" aria-describedby=\"caption-attachment-28234\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_NASDAQ.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_NASDAQ.png\" alt=\"The NASDAQ is also following along its 50DMA\" width=\"550\" height=\"375\" class=\"size-full wp-image-28234\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_NASDAQ.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_NASDAQ-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28234\" class=\"wp-caption-text\">The NASDAQ is also following along its 50DMA<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>So it should not comes as a surprise to note that Apple (AAPL) continues to pivot around its 50DMA. This trading behavior has easily dominated <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/04\/05\/the-apple-trading-model-simplified\/\" target=\"_blank\">the Apple Trading Model<\/a> (ATM) for many weeks now. A potentially large caveat arrived today in the form of a DECLINE in the 50DMA. If AAPL does not pick up the pace soon, this loss of momentum could feed on itself &#8211; especially given the stock has failed to generate much post-Watch momentum and excitement. The latest topping pattern is looming ever larger at this point: the post-earnings &#8220;gap and crap&#8221; combined with a bearish engulfing pattern.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28238\" aria-describedby=\"caption-attachment-28238\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_AAPL.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_AAPL.png\" alt=\"Apple may be losing momentum as the 50DMA begins to turn downward\" width=\"550\" height=\"375\" class=\"size-full wp-image-28238\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_AAPL.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_AAPL-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28238\" class=\"wp-caption-text\">Apple may be losing momentum as the 50DMA begins to turn downward<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The dollar index is looming as a bigger and bigger wildcard. The primary uptrend at the 50DMA has ended and given way to a confirmed breakdown. Today (May 5) the index attempted to rally but stopped cold at resistance which was former support.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28240\" aria-describedby=\"caption-attachment-28240\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_DXY0.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_DXY0.png\" alt=\"The dollar index is slowly breaking down. Can it recover its former luster?\" width=\"550\" height=\"375\" class=\"size-full wp-image-28240\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_DXY0.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_DXY0-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28240\" class=\"wp-caption-text\">The dollar index is slowly breaking down. Can it recover its former luster?<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The dollar&#8217;s new weakness has potentially large implications for commodities and emerging markets. Oil in the form of United States Oil ETF (USO) is continuing its rally. However, a STRANGE thing happened today. While USO gapped up, Energy Select Sector SPDR ETF (XLE) failed to hold onto its opening gains. The volume was not high, but the price action looks like the end of a move. With oil sapping away the consumer surplus that economists have been waiting to get applied to the economy, several economic assumptions and inflation forecasts may need adjustment soon.<\/p>\n<p><em><strong>Which oil play will blink and lead the other one&#8230;?<\/strong><\/em><br \/>\n<center><br \/>\n<figure id=\"attachment_28241\" aria-describedby=\"caption-attachment-28241\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_USO.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_USO.png\" alt=\"United States Oil ETF (USO) gapped higher as oil continues its rally from its recent bottom...\" width=\"550\" height=\"375\" class=\"size-full wp-image-28241\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_USO.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_USO-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28241\" class=\"wp-caption-text\">United States Oil ETF (USO) gapped higher as oil continues its rally from its recent bottom&#8230;<\/figcaption><\/figure><\/p>\n<p><figure id=\"attachment_28242\" aria-describedby=\"caption-attachment-28242\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_XLE.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_XLE.png\" alt=\"The rally for Energy Select Sector SPDR ETF (XLE) may have just ended for now\" width=\"550\" height=\"375\" class=\"size-full wp-image-28242\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_XLE.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_XLE-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28242\" class=\"wp-caption-text\">The rally for Energy Select Sector SPDR ETF (XLE) may have just ended for now<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>I took this divergence as a signal that dollar-related\/sensitive bets could be ready for a big move. I made a big bet on my favorite hedge play: iShares MSCI Emerging Markets (EEM). I am weighted to the bearish side, and I extended out the typical trade with puts expiring in June and calls expiring in July.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28244\" aria-describedby=\"caption-attachment-28244\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_EEM.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_EEM.png\" alt=\"iShares MSCI Emerging Markets (EEM)  takes a long overdue rest\" width=\"550\" height=\"375\" class=\"size-full wp-image-28244\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_EEM.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/05\/150505_EEM-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28244\" class=\"wp-caption-text\">iShares MSCI Emerging Markets (EEM)  takes a long overdue rest<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><center><br \/>\n<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%)<br \/>\n<\/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\" 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 EEM calls and 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 (May 5, 2015) &#8211; Broken Record: Chopfest Continues\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/05\/06\/t2108-update-150505\/\">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":[483,20,219,377,512,511,62,982,21],"tags":[250,350,1195,1225,536,65,226,1597,538,1444],"class_list":["post-28232","post","type-post","status-publish","format-standard","hentry","category-breakdown","category-forex","category-high-tech","category-oil","category-resistance","category-support","category-technical-analysis","category-trading-range","category-u-s-dollar","tag-aapl","tag-apple","tag-eem","tag-ishares-msci-emerging-markets","tag-oil-2","tag-sp-500","tag-t2108","tag-technical-analysis","tag-uso","tag-xle"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update (May 5, 2015) - Broken Record: Chopfest Continues - 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\/05\/06\/t2108-update-150505\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (May 5, 2015) - Broken Record: Chopfest Continues - 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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