{"id":29241,"date":"2015-07-08T20:08:27","date_gmt":"2015-07-09T03:08:27","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=29241"},"modified":"2015-07-08T20:09:43","modified_gmt":"2015-07-09T03:09:43","slug":"t2108-update-150708","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/07\/08\/t2108-update-150708\/","title":{"rendered":"T2108 Update (July 8, 2015) – Dancing Around Oversold As China Flirts With Dysfunction"},"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 occasionally posted on twitter using the #120trade hashtag<\/a>. T2107 measures the percentage of stocks trading above their respective 200DMAs)<\/p>\n

T2108 Status<\/strong>: 23.1%
\nT2107 Status<\/strong>: 35.9% (lowest close since Oct 20)
\nVIX Status<\/strong>: 19.7
\nGeneral (Short-term) Trading Call<\/strong>: Bullish with strong caveats explained below
\nActive T2108 periods<\/strong>: Day #180 over 20%, Day #4 under 30% (underperiod), Day #7 under 40%, Day #33 under 50%, Day #50 under 60%, Day #249 under 70%<\/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>
\nTuesday’s trading (on July 7, 2015) featured a near-perfect combination of the S&P 500 (SPY) breaking 200DMA support as T2108 approached oversold conditions. T2108 dropped as low as 21.2% around 11:30am (Eastern). The S&P 500 first broke through 200DMA support around 10:10am and again around 10:30am. The index hit its low of the day around 11:40am. This is my favorite setup for a reversal as stops get taken out at support, washing out sellers, and oversold conditions (in this case “close enough”) trigger my buying rules. While I was optimistic, I was amazed that the the S&P 500 actually closed UP for the day. The move put my oil-related buys, purchase of CyberArk (CYBR), and Baidu (BIDU) call options well into the green. I was also relieved to have closed out my put options on Caterpillar (CAT) which served as my favorite market hedge. <\/p>\n

<\/p>\n
\n

Closed out $CAT<\/a> puts. "Close enough" to oversold conditions in market to release hedge. #T2108<\/a> #120trade<\/a> Still downside risk to at least $80<\/p>\n

— Dr. Duru (@DrDuru) July 7, 2015<\/a><\/p><\/blockquote>\n