{"id":30603,"date":"2015-09-09T22:40:27","date_gmt":"2015-09-10T05:40:27","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=30603"},"modified":"2015-09-09T22:40:27","modified_gmt":"2015-09-10T05:40:27","slug":"t2108-update-150909","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/09\/09\/t2108-update-150909\/","title":{"rendered":"T2108 Update (September 9, 2015) &#8211; Stock Market Reset: Oversold Round Two"},"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>: 17.8% (Day #1 of a 2nd oversold period. Last one ended the day before.<br \/>\n<strong>T2107 Status<\/strong>: 21.4%<br \/>\n<strong>VIX Status<\/strong>: 26.2<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Bullish<br \/>\n<strong>Active T2108 periods<\/strong>: Day #1 under 20% (underperiod is oversold, last oversold period ended just a day before), Day #14 under 30%, Day #37 under 40%, Day #77 under 50%, Day #94 under 60%, Day #292 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=$SPX&amp;p=D&amp;st=2015-03-09&amp;en=2015-09-09&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2015-03-09&amp;en=2015-09-09&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2015-03-09&amp;en=2015-09-09&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2015-03-09&amp;en=2015-09-09&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=2015-03-09&amp;en=2015-09-09&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=2015-03-09&amp;en=2015-09-09&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=2015-03-09&amp;en=2015-09-09&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=2015-03-09&amp;en=2015-09-09&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=2015-03-09&amp;en=2015-09-09&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nHere we go again.<\/p>\n<p>Just one day after T2108 exited the first oversold period in almost a year, it drops right back into a second one with a close of 17.8. It looks like the battle royale between post-Labor Day bargain shoppers and anxious is officially underway.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_30605\" aria-describedby=\"caption-attachment-30605\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_T2108.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_T2108.png\" alt=\"T2108 started off promising with a small gap up and follow-through. Sellers pushed T2108 into a complete fade by the close.\" width=\"550\" height=\"375\" class=\"size-full wp-image-30605\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_T2108.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_T2108-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-30605\" class=\"wp-caption-text\">T2108 started off promising with a small gap up and follow-through. Sellers pushed T2108 into a complete fade by the close.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The fade on T2108 was equally matched by the S&#038;P 500 (SPY). The index was stopped cold right at its declining 20-day moving average (DMA) which happens to coincide with the high from the oversold period.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_30606\" aria-describedby=\"caption-attachment-30606\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_SP500.png\" alt=\"A wide chopping pattern is developing on the S&amp;P 500\" width=\"550\" height=\"375\" class=\"size-full wp-image-30606\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-30606\" class=\"wp-caption-text\">A wide chopping pattern is developing on the S&#038;P 500<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Essentially, the stock market has developed a nervous chop as it awaits the U.S. Federal Reserve&#8217;s policy decision in a week: <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/09\/08\/t2108-update-150904\/\" target=\"_blank\">Fedaggedon<\/a>. <\/p>\n<p>The volatility index made a big comeback from its low of the day but ended the day short of the dangerzone. A subtle downtrend remains in place from the last intraday high.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_30607\" aria-describedby=\"caption-attachment-30607\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_VIX.png\" alt=\"The volatility index stops short of the dangerzone AND its subtle downtrend from last month&#039;s major (intraday high)\" width=\"550\" height=\"375\" class=\"size-full wp-image-30607\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/09\/150909_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-30607\" class=\"wp-caption-text\">The volatility index stops short of the dangerzone AND its subtle downtrend from last month&#8217;s major (intraday high)<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>With T2108 back in oversold territory, I hit a partial reset on the T2108 trading strategy. Since I am still holding positions from the last oversold period, I did not make new T2108 trades to mark the beginning of the oversold period. The rest of the rules remain the same with a caveat for the aggressive approach. As I follow the aggressive strategy, I will look for a new spike in the VIX for loading up on call options on ProShares Ultra S&#038;P500 (SSO). Given the height of the last spike, I may trigger as early as a 20-25% approach which amounts to 43 on the high end. In the meantime, I will likely play the up and down chop that reverses the previous day&#8217;s move. I am still keenly focused on fading volatility going into the Fed meeting.<\/p>\n<p>Less aggressive traders can now wait for the VIX to make a new closing low in this cycle before making a bullish trade or investment. As always, conservative traders and investors can wait until the oversold period ends before making bullish trades. The same <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/09\/09\/t2108-update-150908\/\" target=\"_blank\">caution on overhead resistance levels<\/a> applies. <\/p>\n<p>Here are the trades on the day: locked in profits on ProShares Ultra VIX Short-Term Futures (UVXY) put options as soon as it appeared UVXY would not follow-through with its gap down; later in the day, a limit order to get back into the same UVXY put options triggered at less than half my original purchase price; bought a new tranche of shares in Direxion Daily Russia Bear 3X ETF (RUSS) as a play on the uptrend and a partial hedge on longs; stubbornly bought back into call options on Workday (WDAY) as I still believe the poor timing of the earnings report greased the skids for an over-reaction; watched another Google (GOOG) call option go from profit to loss as I TRIED to stick with the winning trade. Clearly, I need to keep locking in profits on GOOG call options as soon as practical! GOOG closed the day just barely levitating above its 50DMA pivot point.<\/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: long SVXY shares, long SSO shares and call options, long UVXY put options, long GOOG call options, long WDAY 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 (September 9, 2015) &#8211; Stock Market Reset: Oversold Round Two\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/09\/09\/t2108-update-150909\/\">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":[921,491,62],"tags":[65,362,446,226,1597,303],"class_list":["post-30603","post","type-post","status-publish","format-standard","hentry","category-downtrend","category-oversold","category-technical-analysis","tag-sp-500","tag-spy","tag-sso","tag-t2108","tag-technical-analysis","tag-vix"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update (September 9, 2015) - Stock Market Reset: Oversold Round Two - 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\/09\/09\/t2108-update-150909\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (September 9, 2015) - Stock Market Reset: Oversold Round Two - 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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