{"id":32821,"date":"2016-01-28T00:29:11","date_gmt":"2016-01-28T08:29:11","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=32821"},"modified":"2016-01-28T00:31:31","modified_gmt":"2016-01-28T08:31:31","slug":"t2108-update-160127","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/01\/28\/t2108-update-160127\/","title":{"rendered":"T2108 Update (January 27, 2016) &#8211; A Post-Fed Stalemate"},"content":{"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 <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>: 14.9%<br \/>\n<strong>T2107 Status<\/strong>: 14.9%<br \/>\n<strong>VIX Status<\/strong>: 23.1 (ranged from 20.4 to 27.2)<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: bullish<br \/>\n<strong>Active T2108 periods<\/strong>: Day #14 under 20%, Day #17 under 30%, Day #33 under 40%, Day #37 below 50%, Day #52 under 60%, Day #393 under 70%<\/p>\n<p><strong>Commentary<\/strong><br \/>\n<a href=\"http:\/\/www.federalreserve.gov\/newsevents\/press\/monetary\/20160127a.htm\" target=\"_blank\">The Federal Reserve delivered the perfect &#8220;no new news&#8221; statement<\/a>. It defied <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/01\/27\/t2108-update-160126\/\" target=\"_blank\">my expectation for delivering something substantial relative to the current context of market volatility<\/a>. Media outlets of course tried to make headlines out of the Fed&#8217;s latest pronouncements on monetary policy, but fundamentally, nothing changed. The Fed reiterated its data-dependent approach to normalizing rates at a snail&#8217;s pace. It was a stalemate kind of day as a result. Notably, the trend pushing out the date of the next rate hike continued: September is now the first month where the odds go above 50%. Media outlets that claim the Fed&#8217;s statement keeps a March rate hike in play are off-base.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_32823\" aria-describedby=\"caption-attachment-32823\" style=\"width: 473px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_FedFundsFutures.png\" rel=\"attachment wp-att-32823\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_FedFundsFutures.png\" alt=\"The market now expects the first rate hike in September.\" width=\"483\" height=\"310\" class=\"size-full wp-image-32823\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_FedFundsFutures.png 483w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_FedFundsFutures-300x193.png 300w\" sizes=\"auto, (max-width: 483px) 100vw, 483px\" \/><\/a><figcaption id=\"caption-attachment-32823\" class=\"wp-caption-text\">The market now expects the first rate hike in September.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.cmegroup.com\/trading\/interest-rates\/countdown-to-fomc.html\" target=\"_blank\">CME Group Fedwatch<\/a><\/strong><\/p>\n<p><figure id=\"attachment_32826\" aria-describedby=\"caption-attachment-32826\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_GLD.png\" rel=\"attachment wp-att-32826\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_GLD.png\" alt=\"SPDR Gold Shares (GLD) is following the momentum in rate expectations: the further the push-out, the higher GLD goes...for now.\" width=\"550\" height=\"375\" class=\"size-full wp-image-32826\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_GLD.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_GLD-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-32826\" class=\"wp-caption-text\">SPDR Gold Shares (GLD) is following the momentum in rate expectations: the further the push-out, the higher GLD goes&#8230;for now.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>T2108, the percentage of stocks trading above their respective 40-day moving averages (DMAs), nudged downward to 14.9% after ranging from 13.1% to 17.7%. At one point, the S&#038;P 500 (SPY) was making a breakout move at its highs -an end to the oversold period seemed near. Instead, the index closed down 1.1% to stay within a tight 4-day trading range of alternating up and down days. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_32824\" aria-describedby=\"caption-attachment-32824\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_SP500.png\" rel=\"attachment wp-att-32824\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_SP500.png\" alt=\"The S&amp;P 500 (SPY) stays stuck in churn mode after failing to hold a breakout.\" width=\"550\" height=\"375\" class=\"size-full wp-image-32824\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-32824\" class=\"wp-caption-text\">The S&#038;P 500 (SPY) stays stuck in churn mode after failing to hold a breakout.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The volatility index, the VIX, experienced the most dramatic stalemate. It ranged from 20.4 to 27.2 before closing with a mere 2.7% gain. This means <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/01\/27\/t2108-update-160126\/\" target=\"_blank\">my pre-Fed fade of volatility<\/a> is actually not likely to work this time around. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_32825\" aria-describedby=\"caption-attachment-32825\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_VIX.png\" rel=\"attachment wp-att-32825\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_VIX.png\" alt=\"The volatility index closes with a minimal response to the Fed\" width=\"550\" height=\"375\" class=\"size-full wp-image-32825\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-32825\" class=\"wp-caption-text\">The volatility index closes with a minimal response to the Fed<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Much bigger and more important than the Fed for the regular trading day were Apple (AAPL) and Netflix (NFLX).<\/p>\n<p><a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/10\/28\/lessons-learned-from-the-apple-pre-earnings-play-for-october-2015\/\" target=\"_blank\">Like the last earnings cycle<\/a>, Apple opened for post-earnings trading on a Fed day. Apple (AAPL) closed down 6.6%. It was a move consistent with <a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/10\/27\/the-apple-pre-earnings-play-for-october-2015-points-bearish\/\" target=\"_blank\">the Apple pre-earnings trade<\/a> and confirmed that AAPL remains <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/01\/24\/t2108-update-160122\/\" target=\"_blank\">a very sick stock<\/a>. The following commentary on China put as good a face as possible on Apple&#8217;s business there, but the softening in Hong Kong caught the headlines (emphasis mine, quote from <a href=\"http:\/\/seekingalpha.com\/article\/3836826-apples-aapl-ceo-tim-cook-q1-2016-results-earnings-call-transcript\" target=\"_blank\">Seeking Alpha transcripts<\/a>):<\/p>\n<blockquote><p>&#8220;We know the conditions in China have been a source of concern for many investors. Last summer, while many companies were experiencing weakness in their China-based results, we were seeing just the opposite, with incredible momentum for iPhone, Mac and the App Store, in particular.<\/p>\n<p>In the December quarter, despite the turbulent environment, we produced our best results ever in Greater China, with revenue growing 14% over last year, 47% sequentially, and 17% year-over-year in constant currency. These great results were fueled by our highest ever quarterly iPhone sales and record App Store performance.<\/p>\n<p><strong>Notwithstanding these record results, we began to see some signs of economic softness in Greater China earlier this month, most notably in Hong Kong.<\/strong> Beyond the short-term volatility, we remain very confident about the long-term potential of the China market and the large opportunities ahead of us and we are maintaining our investment plans.<\/p>\n<p>Despite the economic challenges all over the world, Apple remains incredibly strong.&#8221;<\/p><\/blockquote>\n<p><center><br \/>\n<figure id=\"attachment_32828\" aria-describedby=\"caption-attachment-32828\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_AAPL.png\" rel=\"attachment wp-att-32828\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_AAPL.png\" alt=\"Apple (AAPL) collapses after reporting earnings to a new 17-month low.\" width=\"550\" height=\"375\" class=\"size-full wp-image-32828\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_AAPL.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_AAPL-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-32828\" class=\"wp-caption-text\">Apple (AAPL) collapses after reporting earnings to a new 17-month low.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The market has already become accustomed to a weak Apple. However, the growing weakness in Netflix (NFLX) is something new. The post-earnings fade in NFLX continues with a confirmed 200DMA breakdown.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_32829\" aria-describedby=\"caption-attachment-32829\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_NFLX.png\" rel=\"attachment wp-att-32829\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_NFLX.png\" alt=\"Netflix (NFLX) has not closed this low since the summer of 2015\" width=\"550\" height=\"375\" class=\"size-full wp-image-32829\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_NFLX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/01\/160127_NFLX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-32829\" class=\"wp-caption-text\">Netflix (NFLX) has not closed this low since the summer of 2015<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Now the big question: is market leadership and participation narrowing even further or are new leaders emerging? How long can NFLX and the general stock market continue to diverge? Which one will blink first?<\/p>\n<p>&#8212; &#8211; &#8212;<\/p>\n<p>For readers interested in reviewing my trading rules for T2108, please see my post in the wake of the August Angst, &#8220;<a href=\"http:\/\/drduru.com\/onetwentytwo\/2015\/08\/25\/t2108-update-150824\/\" target=\"_blank\">How To Profit From An EPIC Oversold Period<\/a>&#8220;, and\/or review my <a href=\"http:\/\/www.drduru.com\/money\/T2108.htm\" target=\"_blank\">T2108 Resource Page<\/a>. <\/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.hcom\/h-sc\/ui?s=$SPX&amp;p=D&amp;st=2015-07-26&amp;en=2016-01-26&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2015-07-26&amp;en=2016-01-26&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2015-07-26&amp;en=2016-01-26&amp;id=p25615696567\" target=\"_blank\">U.S. Dollar Index<\/a> (U.S. dollar)<br \/>\n<a title=\"6-month chart of EEM\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=EEM&amp;p=D&amp;st=2015-07-26&amp;en=2016-01-26&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=2015-07-26&amp;en=2016-01-26&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=2015-07-26&amp;en=2016-01-26&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=2015-07-26&amp;en=2016-01-26&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=2015-07-26&amp;en=2016-01-26&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=2015-07-26&amp;en=2016-01-26&amp;id=p15880085697\" target=\"_blank\">IBB<\/a> (iShares Nasdaq Biotechnology).<\/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 and short UVXY put options, long SSO call options, long SSO shares, 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 (January 27, 2016) &#8211; A Post-Fed Stalemate\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2016\/01\/28\/t2108-update-160127\/\">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":[199,219,599,62],"tags":[250,200,405,65,226,1597,303],"class_list":["post-32821","post","type-post","status-publish","format-standard","hentry","category-commodities","category-high-tech","category-internet","category-technical-analysis","tag-aapl","tag-gld","tag-nflx","tag-sp-500","tag-t2108","tag-technical-analysis","tag-vix"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update (January 27, 2016) - A Post-Fed Stalemate - 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\/2016\/01\/28\/t2108-update-160127\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (January 27, 2016) - A Post-Fed Stalemate - 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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