{"id":31087,"date":"2015-10-11T17:51:56","date_gmt":"2015-10-12T00:51:56","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=31087"},"modified":"2015-10-11T17:51:56","modified_gmt":"2015-10-12T00:51:56","slug":"t2108-update-151009","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2015\/10\/11\/t2108-update-151009\/","title":{"rendered":"T2108 Update (October 9, 2015) &#8211; Commodity Currencies Leading the Way to Overbought Trading Conditions"},"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>: 65.4% (near 6-month high)<br \/>\n<strong>T2107 Status<\/strong>: 29.1%<br \/>\n<strong>VIX Status<\/strong>: 17.1<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Neutral (target of 1996 on the S&#038;P 500 has already occurred ahead of overbought conditions. See &#8220;<a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/09\/18\/t2108-update-150918\/\" target=\"_blank\">From the Edge of A Breakout to the Ledge of A Breakdown<\/a>&#8221; for more details).<br \/>\n<strong>Active T2108 periods<\/strong>: Day #6 over 20%, Day #5 over 30%, Day #5 over 40%, Day #3 over 50%, Day #2 over 60%, Day #320 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=$SPX&amp;p=D&amp;st=2015-04-09&amp;en=2015-10-09&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2015-04-09&amp;en=2015-10-09&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of SDS\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SDS&amp;p=D&amp;st=2015-04-09&amp;en=2015-10-09&amp;id=p15880085697\" target=\"_blank\">SDS<\/a> (ProShares UltraShort S&amp;P500)<br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2015-04-09&amp;en=2015-10-09&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=2015-04-09&amp;en=2015-10-09&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=2015-04-09&amp;en=2015-10-09&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=2015-04-09&amp;en=2015-10-09&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=2015-04-09&amp;en=2015-10-09&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=2015-04-09&amp;en=2015-10-09&amp;id=p15880085697\" target=\"_blank\">CAT<\/a> (Caterpillar).<br \/>\n<a title=\"6-month chart of IBB\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=IBB&amp;p=D&amp;st=2015-04-09&amp;en=2015-10-09&amp;id=p15880085697\" target=\"_blank\">IBB<\/a> (iShares Nasdaq Biotechnology).<\/p>\n<p><strong>Commentary<\/strong><br \/>\nIt was a close call. T2108 gained for the 9th straight trading day. My favorite technical indicator got as high as 67.6%, still short of overbought conditions. The S&#038;P 500 (SPY) also closed with a very marginal gain, essentially flat. The index remains comfortably above its 50DMA. With the upper-Bollinger Bands (BBs) opening upward, a run-up to 200DMA resistance sometime in the coming weeks looks all the more likely. Still, I decided to lock in profits on my last play on the S&#038;P 500 (SPY): shares in ProShares Ultra S&#038;P500 (SSO).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_31088\" aria-describedby=\"caption-attachment-31088\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_SP500.png\" alt=\"The S&amp;P 500 (SPY) is maintaining a V-like bounce from oversold conditions\" width=\"550\" height=\"375\" class=\"size-full wp-image-31088\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-31088\" class=\"wp-caption-text\">The S&#038;P 500 (SPY) is maintaining a V-like bounce from oversold conditions<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>I am skipping to what I consider the biggest developing story from a technical and fundamental standpoint: a looming breakdown for the U.S. dollar index (UUP). At the same time, commodity currencies are soaring. These moves are the surest signs that risk-aversion is fading into the rear-view mirror and market sentiment is steadily improving.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_31093\" aria-describedby=\"caption-attachment-31093\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_DXY0.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_DXY0.png\" alt=\"Is the U.S. dollar starting to print a bearish wedge pattern? \" width=\"550\" height=\"375\" class=\"size-full wp-image-31093\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_DXY0.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_DXY0-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-31093\" class=\"wp-caption-text\">Is the U.S. dollar starting to print a bearish wedge pattern?<\/figcaption><\/figure><\/p>\n<figure id=\"attachment_31091\" aria-describedby=\"caption-attachment-31091\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_AUDJPY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_AUDJPY.png\" alt=\"The Australian dollar (FXA) followed through on its breakout against the Japanese yen (FXY)\" width=\"550\" height=\"375\" class=\"size-full wp-image-31091\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_AUDJPY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_AUDJPY-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-31091\" class=\"wp-caption-text\">The Australian dollar (FXA) followed through on its breakout against the Japanese yen (FXY)<\/figcaption><\/figure>\n<p><figure id=\"attachment_31094\" aria-describedby=\"caption-attachment-31094\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_USDCAD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_USDCAD.png\" alt=\"The Canadian dollar has relentlessly gained on the U.S. dollar - a strength unseen since April\" width=\"550\" height=\"375\" class=\"size-full wp-image-31094\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_USDCAD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151011_USDCAD-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-31094\" class=\"wp-caption-text\">The Canadian dollar has relentlessly gained on the U.S. dollar &#8211; a strength unseen since April<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>While I am very skeptical of the durability and sustainability of the run-up in commodity-related currencies, I am more and more interested in the potential for the U.S. dollar to break down. Ever since its 12-year peak in March, the index has slowly but surely taken on a downtrend. It is definitely not the unstoppable dollar of before. In a previous post, I argued that the U.S. dollar will remain trapped in a trading range. NOW, I have to wonder whether a real downtrend is looming. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_31098\" aria-describedby=\"caption-attachment-31098\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_GLD.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_GLD.png\" alt=\"In the face of growing dollar weakness, could the classic (former?) anti-dollar trade in gold (GLD) finally become attractive? The 50DMA is turning upward and GLD has printed two higher lows...\" width=\"550\" height=\"375\" class=\"size-full wp-image-31098\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_GLD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_GLD-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-31098\" class=\"wp-caption-text\">In the face of growing dollar weakness, could the classic (former?) anti-dollar trade in gold (GLD) finally become attractive? The 50DMA is turning upward and GLD has printed two higher lows&#8230;<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Basically, the pushout of the odds for a rate hike is producing this opportunity for traders to behave as if they have a green light to do the contrarian commodity-related trade. I have stopped adding to my fades on this move, but I am poised to get back into it if (when?) weakness shows up again.<\/p>\n<p>There are two stock charts I missed in <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/10\/09\/t2108-update-151008\/\" target=\"_blank\">the last T2108 Update<\/a> that are of great interest: Baidu (BIDU) and Tesla (TSLA).<\/p>\n<p>BIDU has been in decline ever since it gapped down on a 50DMA failure after April earnings. The second attempt at a recovery was marred by an even more disastrous post-earnings performance in July. After a meager recovery failed, I officially dropped BIDU from my list of stocks to trade aggressively to the long side. If I were a bear at the time, BIDU would have been a top stock to short. Because I dropped BIDU from my list, I was not prepared to rush in and buy some shares during the flash crash in August. Last week&#8217;s 50DMA failure solidified the bearish bias on this former titan.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_31096\" aria-describedby=\"caption-attachment-31096\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_BIDU.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_BIDU.png\" alt=\"Baidu (BIDU) has completely lost its mojo over the past 6 months\" width=\"550\" height=\"375\" class=\"size-full wp-image-31096\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_BIDU.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_BIDU-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-31096\" class=\"wp-caption-text\">Baidu (BIDU) has completely lost its mojo over the past 6 months<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Tesla (TSLA) often acts like Teflon: bad news just bounces off the stock and recoveries from tumbles have been inevitable. Something has subtly changed since TSLA gapped below 50DMA support after August earnings &#8211; the stock is acting with more and more of a bearish bias. It is hard to see because the stock managed to break out above 50DMA support in September. However, note carefully that TSLA just barely closed the post-earnings gap and then stalled. Now, the stock has broken down below the even more critical 200DMA support again. And again, trading volume is higher than normal. This is a potentially important change in sentiment on the stock. I am not likely to make any trades on the stock anytime soon, but I am watching with greater interest.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_31100\" aria-describedby=\"caption-attachment-31100\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_TSLA.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_TSLA.png\" alt=\"Tesla Motors (TSLA) is showing a weakening trend confirmed by the latest 200DMA breakdown\" width=\"550\" height=\"375\" class=\"size-full wp-image-31100\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_TSLA.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2015\/10\/151009_TSLA-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-31100\" class=\"wp-caption-text\">Tesla Motors (TSLA) is showing a weakening trend confirmed by the latest 200DMA breakdown<\/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><\/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, short AUD\/JPY, net long U.S. dollar, long GLD<\/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 (October 9, 2015) &#8211; Commodity Currencies Leading the Way to Overbought Trading Conditions\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2015\/10\/11\/t2108-update-151009\/\">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":[20,599,62,518],"tags":[772,310,759,760,296,200,65,226,1597,888,887,1591,469],"class_list":["post-31087","post","type-post","status-publish","format-standard","hentry","category-forex","category-internet","category-technical-analysis","category-transportation","tag-audjpy","tag-australian-dollar","tag-baidu","tag-bidu","tag-canadian-dollar","tag-gld","tag-sp-500","tag-t2108","tag-technical-analysis","tag-tesla-motors-inc","tag-tsla","tag-u-s-dollar","tag-usdcad"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update (October 9, 2015) - Commodity Currencies Leading the Way to Overbought Trading Conditions - 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\/10\/11\/t2108-update-151009\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (October 9, 2015) - Commodity Currencies Leading the Way to Overbought Trading Conditions - 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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