{"id":28725,"date":"2015-06-07T21:19:30","date_gmt":"2015-06-08T04:19:30","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=28725"},"modified":"2015-06-07T23:08:33","modified_gmt":"2015-06-08T06:08:33","slug":"t2108-update-150605","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/06\/07\/t2108-update-150605\/","title":{"rendered":"T2108 Update (June 5, 2015) &#8211; Poised for A Bounce"},"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>: 36.8%<br \/>\n<strong>T2107 Status<\/strong>: 47.0%<br \/>\n<strong>VIX Status<\/strong>: 14.2<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Neutral with a &#8220;bullish bias&#8221;<br \/>\n<strong>Active T2108 periods<\/strong>: Day #158 over 20%, Day #117 above 30%, Day #2 under 40% (underperiod), Day #10 under 50%, Day #28 under 60%, Day #227 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=$SPX&amp;p=D&amp;st=2014-12-05&amp;en=2015-06-05&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2014-12-05&amp;en=2015-06-05&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2014-12-05&amp;en=2015-06-05&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2014-12-05&amp;en=2015-06-05&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=2014-12-05&amp;en=2015-06-05&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=2014-12-05&amp;en=2015-06-05&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=2014-12-05&amp;en=2015-06-05&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=2014-12-05&amp;en=2015-06-05&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=2014-12-05&amp;en=2015-06-05&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\n<a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/05\/31\/t2108-update-150529\/\" target=\"_blank\">A week ago, I wrote in the T2108 Update<\/a> that another crack had appeared in the chop that is the S&#038;P 500 (SPY). T2107, the percentage of stocks trading above their respective 200DMAs, had lost momentum and was breaking down. T2107 spent the week churning up and down until it finally followed through lower on Friday. However, a strong bounce to close out trading on the day flipped the downward bias to an upward one. Without T2107 or T2108, it would be hard to see from the chart of the S&#038;P 500 that the index is actually poised for a bounce.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28692\" aria-describedby=\"caption-attachment-28692\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SP500.png\" alt=\"The S&amp;P 500 makes a fresh trip below its 50-day moving average (DMA) pivot line\" width=\"550\" height=\"375\" class=\"size-full wp-image-28692\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28692\" class=\"wp-caption-text\">The S&#038;P 500 makes a fresh trip below its 50-day moving average (DMA) pivot line<\/figcaption><\/figure><br \/>\n<figure id=\"attachment_28727\" aria-describedby=\"caption-attachment-28727\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_T2108.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_T2108.png\" alt=\"Like T2107, T2108 makes a strong bounce off its lows forming a &quot;hammer&quot; pattern\" width=\"550\" height=\"375\" class=\"size-full wp-image-28727\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_T2108.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_T2108-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28727\" class=\"wp-caption-text\">Like T2107, T2108 makes a strong bounce off its lows forming a &#8220;hammer&#8221; pattern<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The chart above shows that T2108, like T2107, made a strong bounce from its lows. The resulting pattern is known as a &#8220;hammer&#8221;; it represents a rush of buyers (and\/or short-covering) that fills the vacuum left by exhausted sellers. It was this rush the prevented the S&#038;P 500 from making a more ominous trade lower below its 50DMA pivot. I took this opportunity to double down on some call options on ProShares Ultra S&#038;P500 (SSO). I purchased the first tranche on Thursday as T2108 retested lows of the current trading range. I added more on Friday because around 30% has often served as &#8220;close enough&#8221; to oversold for T2108. I do not plan to buy more until\/unless T2108 hits actual oversold levels (below 20%).<\/p>\n<p>The volatility index (the VIX) also supports the prospects for a bounce as it faded from the very long-standing pivot line at 15.35.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28728\" aria-describedby=\"caption-attachment-28728\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_VIX.png\" alt=\"For two days in a row, the volatility index fails to break through resistance at the pivot line.\" width=\"550\" height=\"375\" class=\"size-full wp-image-28728\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28728\" class=\"wp-caption-text\">For two days in a row, the volatility index fails to break through resistance at the pivot line.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>This resistance is of course bad for my call options on ProShares Ultra VIX Short-Term Futures ETF (UVXY). Rather than bailing on them, I decided to hold them as a small hedge.<\/p>\n<p>The week was full of news on the economy and monetary policy here in the U.S. and major economies across the globe. Together they caused a lot of churn, some of which is not apparent without reviewing intraday charts. I will stick to the daily charts in this review of what interests me going into this trading week.<\/p>\n<p><strong>Apple (AAPL)<\/strong><br \/>\nThe pre-WWDC trade did not work out last week as Apple (AAPL) slowly drifted back to its 50DMA. <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/05\/27\/t2108-update-150526\/\" target=\"_blank\">When I laid out the plan for this trade<\/a>, I noted the tendency for AAPL to gravitate toward this pivot as a primary risk. I still have some call options expiring this Friday. I may add more depending on Monday&#8217;s trading as I think AAPL is now poised to bounce.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28729\" aria-describedby=\"caption-attachment-28729\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_AAPL.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_AAPL.png\" alt=\"Over the past week, Apple (AAPL) traded straight down toward its 50DMA\" width=\"550\" height=\"375\" class=\"size-full wp-image-28729\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_AAPL.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_AAPL-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28729\" class=\"wp-caption-text\">Over the past week, Apple (AAPL) traded straight down toward its 50DMA<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>Shake Shack (SHAK)<\/strong><br \/>\nSHAK has definitely become my favorite stock to watch and not trade. <a href=\"http:\/\/drduru.com\/onetwentytwo\/tag\/shak\/\" target=\"_blank\">I have featured it in several posts<\/a> &#8211; so far, so good on calling it from the sidelines. Now, SHAK looks poised for another bounce as it made a very low volume retest of its 20DMA upward trend. It closed out the week with a nice &#8220;doji&#8221; that signals the end of the little selling momentum that was there. If I decide to trade this one, I will do my best to send up the smoke signals on StockTwits and Twitter.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28730\" aria-describedby=\"caption-attachment-28730\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SHAK.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SHAK.png\" alt=\"Shake Shack (SHAK) looks poised for another attempt to invalidate the topping pattern now in place\" width=\"550\" height=\"375\" class=\"size-full wp-image-28730\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SHAK.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_SHAK-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28730\" class=\"wp-caption-text\">Shake Shack (SHAK) looks poised for another attempt to invalidate the topping pattern now in place<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>iShares 20+ Year Treasury Bond ETF (TLT)<\/strong><br \/>\nWhile the path to resistance was not a straight-line, my bullish call on TLT did work out. Unfortunately, I held out for more instead of seeing the difficulty likely in store for TLT to make more progress past stiff resistane at the 200DMA. My existing position blinded me to this classic short setup. TLT has now (re)confirmed an on-going breakdown.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28731\" aria-describedby=\"caption-attachment-28731\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_TLT.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_TLT.png\" alt=\"iShares 20+ Year Treasury Bond ETF (TLT) sets up a classic short as it fails at 200DMA resistance\" width=\"550\" height=\"375\" class=\"size-full wp-image-28731\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_TLT.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_TLT-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28731\" class=\"wp-caption-text\">iShares 20+ Year Treasury Bond ETF (TLT) sets up a classic short as it fails at 200DMA resistance<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>LinkedIn Corporation (LNKD)<\/strong><br \/>\nLNKD is already bouncing and my post-earnings position is now working quite well. Unlike TLT, I will be quite ready to lock in profits if\/when LNKD retests overhead resistance at the now converged 50 and 200DMAs. LNKD has a MONSTER post-earnings gap down to fill which I think will take considerable time to heal.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28732\" aria-describedby=\"caption-attachment-28732\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_LNKD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_LNKD.png\" alt=\"LinkedIn Corporation (LNKD) has finally sprung back to life but overhead resistance should prove tough\" width=\"550\" height=\"375\" class=\"size-full wp-image-28732\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_LNKD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_LNKD-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28732\" class=\"wp-caption-text\">LinkedIn Corporation (LNKD) has finally sprung back to life but overhead resistance should prove tough<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>iShares MSCI Emerging Markets ETF (EEM)<\/strong><br \/>\n<a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/05\/09\/t2108-update-150508\/\" target=\"_blank\">I last talked about EEM a month ago<\/a>. I had a great closeout of put options and planned to ride the long side of my hedge (call options) on the house&#8217;s money. EEM has YET to regain any lift since then. Indeed, EEM has suffered a very bad double breakdown below its 50DMA and then, more importantly, its 200DMA.<\/p>\n<p>The second breakdown motivated me to load up on a fresh hedge: new put options and new call options (I am still sitting on the old ones, almost worthless now). Sure enough, EEM followed through on the breakdown the next day. I have not taken profits. The momentum is clearly against EEM here, and I have time to see how this plays out. I think if EEM experiences another of those immediate turn-arounds, I should have time to pay for the put options with profits on the call options. I think a bounce could slice right through the 200DMA before losing steam at the 50DMA. Stay tuned.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_28735\" aria-describedby=\"caption-attachment-28735\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_EEM.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_EEM.png\" alt=\"iShares MSCI Emerging Markets ETF (EEM) is still breaking down\" width=\"550\" height=\"375\" class=\"size-full wp-image-28735\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_EEM.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/06\/150605_EEM-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-28735\" class=\"wp-caption-text\">iShares MSCI Emerging Markets ETF (EEM) is still breaking down<\/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 UVXY call options, long AAPL call options, long TLT call options, long call and put options for EEM<\/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 5, 2015) &#8211; Poised for A Bounce\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/06\/07\/t2108-update-150605\/\">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":[456,1054,219,599,62],"tags":[250,534,1195,578,579,65,1544,1545,226,1597,280,1092,303,931],"class_list":["post-28725","post","type-post","status-publish","format-standard","hentry","category-bonds-2","category-dining","category-high-tech","category-internet","category-technical-analysis","tag-aapl","tag-apple-inc","tag-eem","tag-linkedin","tag-lnkd","tag-sp-500","tag-shak","tag-shake-shack","tag-t2108","tag-technical-analysis","tag-tlt","tag-uvxy","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 (June 5, 2015) - Poised for A Bounce - 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\/06\/07\/t2108-update-150605\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (June 5, 2015) - Poised for A Bounce - 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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