{"id":29291,"date":"2015-07-11T09:05:06","date_gmt":"2015-07-11T16:05:06","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=29291"},"modified":"2015-07-11T09:05:06","modified_gmt":"2015-07-11T16:05:06","slug":"t2108-update-150710","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/07\/11\/t2108-update-150710\/","title":{"rendered":"T2108 Update (July 10, 2015) &#8211; A Light Appears Behind the Pressure Cooker"},"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>: 32.6% (the 9 percentage point increase is a 38% increase)<br \/>\n<strong>T2107 Status<\/strong>: 40.5%<br \/>\n<strong>VIX Status<\/strong>: 16.8<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Bullish<br \/>\n<strong>Active T2108 periods<\/strong>: Day #181 over 20%, Day #1 over 30% (overperiod, ends 5 days under 30%), Day #8 under 40%, Day #34 under 50%, Day #51 under 60%, Day #250 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=$SPX&amp;p=D&amp;st=2015-01-10&amp;en=2015-07-10&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2015-01-10&amp;en=2015-07-10&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2015-01-10&amp;en=2015-07-10&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2015-01-10&amp;en=2015-07-10&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=2015-01-10&amp;en=2015-07-10&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=2015-01-10&amp;en=2015-07-10&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=2015-01-10&amp;en=2015-07-10&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=2015-01-10&amp;en=2015-07-10&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=2015-01-10&amp;en=2015-07-10&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nT2108 ended the week with a tremendous and encouraging surge. This is the kind of move that typically signals the end of an oversold period or, in this case, the test of oversold conditions.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_29292\" aria-describedby=\"caption-attachment-29292\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_T2108.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_T2108.png\" alt=\"T2108 soars to its highest level since the Greek debt drama took it down on June 29th\" width=\"550\" height=\"375\" class=\"size-full wp-image-29292\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_T2108.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_T2108-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-29292\" class=\"wp-caption-text\">T2108 soars to its highest level since the Greek debt drama took it down on June 29th<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>T2108&#8217;s surge has set up a bullish divergence with the S&#038;P 500 (SPY). The index&#8217;s 1.2% gain once again confirmed its 200DMA as support, but the close is NOT the highest close since the Greek debt drama set up the first 200DMA test on June 29th.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_29293\" aria-describedby=\"caption-attachment-29293\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_SP500.png\" alt=\"The S&amp;P 500 leaps off its 200DMA again in what has become a very crowded party around this critical line of support.\" width=\"550\" height=\"375\" class=\"size-full wp-image-29293\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-29293\" class=\"wp-caption-text\">The S&#038;P 500 leaps off its 200DMA again in what has become a very crowded party around this critical line of support.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The volatility index, the VIX, remains elevated above the 15.35 pivot. Its close on Friday, July 10th, is only the third lowest close since June 29th. I cannot &#8220;ring the bell&#8221; for an all-clear until the VIX has closed below the pivot line.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_29294\" aria-describedby=\"caption-attachment-29294\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_VIX.png\" alt=\"The volatility index, the VIX, plunges yet again but remains well within the current dangerzone\" width=\"550\" height=\"375\" class=\"size-full wp-image-29294\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-29294\" class=\"wp-caption-text\">The volatility index, the VIX, plunges yet again but remains well within the current dangerzone<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Given the persistent danger and risk, I decided to refine my approach to the current T2108 trade to fade volatility. I bought a small number of ProShares Ultra VIX Short-Term Futures ETF (UVXY) at its 50DMA as a small hedge against my put options. This move is also consistent with a plan I discussed in earlier posts to get more bearish if the VIX managed to close at a new high for this current cycle. On Thursday, July 9th, the VIX just BARELY managed to close at a fresh high at 20. The intra-day high was 19.8. The market did not deliver follow-through, so I cannot technically get more bearish, but it makes sense to finally start hedging more.<\/p>\n<p>My plan is to sell the UVXY shares on it next spike higher. If I had followed this strategy earlier, I would have paid for my put options and then some by now. My most profitable (and desired) outcome remains a continued plunge in volatility.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_29295\" aria-describedby=\"caption-attachment-29295\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_UVXY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_UVXY.png\" alt=\"The ProShares Ultra VIX Short-Term Futures ETF (UVXY) cracks its 50DMA again but, like the VIX, remains elevated.\" width=\"550\" height=\"375\" class=\"size-full wp-image-29295\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_UVXY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_UVXY-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-29295\" class=\"wp-caption-text\">The ProShares Ultra VIX Short-Term Futures ETF (UVXY) cracks its 50DMA again but, like the VIX, remains elevated.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>I am also monitoring the Australian dollar (FXA) versus the Japanese yen (FXY) more closely. It has been a very good gauge of risk aversion during this period of angst. The week ended with dramatic churn in the price of iron ore. On Wednesday it plunged 10% and then on Thursday soared 10%. I will have more to write on the fundamentals in a future piece. Suffice to say for now that until iron ore makes a new low, traders should assume the spike ends the latest bearish move in iron ore. As long as iron ore stays off the recent multi-year low (going back to at least 2005!), traders will have reason to get at least marginally more bullish on the entire &#8220;China complex&#8221; (and China is the much more important sentimental and fundamental factor weighing on markets than Greece). AUD\/JPY now looks like it has bottomed for now.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_29296\" aria-describedby=\"caption-attachment-29296\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AUDJPY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AUDJPY.png\" alt=\"The Australian dollar versus the Japanese yen has finally relieved itself from oversold conditions by moving off its lower-Bollinger Band (BB) for the first time in a week and a half\" width=\"550\" height=\"375\" class=\"size-full wp-image-29296\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AUDJPY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AUDJPY-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-29296\" class=\"wp-caption-text\">The Australian dollar versus the Japanese yen has finally relieved itself from oversold conditions by moving off its lower-Bollinger Band (BB) for the first time in a week and a half<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The Australian dollar is of course not out of the woods by a longshot. In line with my hedge on UVXY, I have begun to short AUD\/JPY as a currency hedge. AUD\/JPY has a LOT of work to do to get above its critical 50 and 200DMAs.<\/p>\n<p>Finally, the most gratifying trade from Friday was Apple (AAPL). In &#8220;<a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/07\/09\/apple-finally-flips-to-oversold\/\" target=\"_blank\">Apple Finally Flips To Oversold<\/a>&#8221; I explained why I thought AAPL (AAPL) was due for a bounce. AAPL delivered big time with a huge gap up that received follow-through buying. AAPL managed to close near its high for the day.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_29298\" aria-describedby=\"caption-attachment-29298\" style=\"width: 540px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AAPL.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AAPL.png\" alt=\"Apple (AAPL) surges with a bullish gap up. The stock even reversed most of the previous day&#039;s selling at one point.\" width=\"550\" height=\"375\" class=\"size-full wp-image-29298\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AAPL.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/07\/150710_AAPL-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-29298\" class=\"wp-caption-text\">Apple (AAPL) surges with a bullish gap up. The stock even reversed most of the previous day&#8217;s selling at one point.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>I sold a portion of my call options to take some profit. I am going to try to ride out the remainder through the coming week. Note well that AAPL still has work to do to break the current short-term downtrend as partially defined by its now declining 20DMA. The 50DMA is also starting to decline.<\/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><\/p>\n<p>The charts above are the my LATEST updates independent of the date of this given T2108 post. For my latest T2108 post <a href=\"http:\/\/drduru.com\/onetwentytwo\/tag\/t2108\/\" target=\"_blank\">click here<\/a>.<\/p>\n<p>\n<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: net short the euro, long UVXY put options, long USO call 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 (July 10, 2015) &#8211; A Light Appears Behind the Pressure Cooker\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/07\/11\/t2108-update-150710\/\">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":[584,20,219,511,62],"tags":[250,534,772,310,309,513,138,65,226,1597,1092,303,178],"class_list":["post-29291","post","type-post","status-publish","format-standard","hentry","category-bollinger-band","category-forex","category-high-tech","category-support","category-technical-analysis","tag-aapl","tag-apple-inc","tag-audjpy","tag-australian-dollar","tag-fxa","tag-fxy","tag-japanese-yen","tag-sp-500","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 (July 10, 2015) - A Light Appears Behind the Pressure Cooker - 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\/07\/11\/t2108-update-150710\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (July 10, 2015) - A Light Appears Behind the Pressure Cooker - 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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