{"id":33580,"date":"2016-03-13T05:19:54","date_gmt":"2016-03-13T12:19:54","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=33580"},"modified":"2016-03-13T05:19:54","modified_gmt":"2016-03-13T12:19:54","slug":"t2108-update-160311","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/03\/13\/t2108-update-160311\/","title":{"rendered":"T2108 Update (March 11, 2016) &#8211; Another Pre-Fed Critical Juncture for the Stock Market"},"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>: 85.7%<br \/>\n<strong>T2107 Status<\/strong>: 37.8% (new 7-month high)<br \/>\n<strong>VIX Status<\/strong>: 16.5<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: cautiously bullish (see caveats below)<br \/>\n<strong>Active T2108 periods<\/strong>: Day #21 over 20%, Day #20 over 30%, Day #17 over 40%, Day #14 over 50%, Day #10 over 60%, Day #9 over 70%, Day #7 over 80% (overbought)<\/p>\n<p><strong>Commentary<\/strong><br \/>\nSometimes what determines the health of a trend is not the immediate momentum but the capacity for coming back from a setback. In <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/03\/09\/t2108-update-160308\/\" target=\"_blank\">the last T2108 Update<\/a>, I described how the market suffered a rare setback rare for this post-oversold bounce. On Friday, March 11th, the stock market came back strong. <\/p>\n<p>T2108, the percentage of stocks trading above their respective 40-day moving averages (DMAs) closed near its 4-year high, and the S&#038;P 500 (SPY) surged right to critical resistance at its 200DMA. The index is closing in on a flat year-to-date performance. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_33581\" aria-describedby=\"caption-attachment-33581\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_SP500.png\" rel=\"attachment wp-att-33581\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_SP500.png\" alt=\"The S&amp;P 500 (SPY) jumps right to resistance as buyers flirt with a major breakout.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33581\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33581\" class=\"wp-caption-text\">The S&#038;P 500 (SPY) jumps right to resistance as buyers flirt with a major breakout.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Normally, I would start talking about the high odds of a setback given overbought conditions at such a critical line of resistance. However, T2107, the percentage of stocks trading above their respective 200DMAs, jumped to a fresh 7-month high. As I have stated earlier, T2108 is so high and so deep into overbought territory that I must use T2107 to verify the health of the stock market. (I will wave a yellow flag if T2108 falters notably).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33582\" aria-describedby=\"caption-attachment-33582\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_T2107.png\" rel=\"attachment wp-att-33582\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_T2107.png\" alt=\"T2107 resumes its upward momentum alongside the S&amp;P 500.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33582\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_T2107.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_T2107-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33582\" class=\"wp-caption-text\">T2107 resumes its upward momentum alongside the S&#038;P 500.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The fresh burst of buying also pushed the volatility index, the VIX, ever closer to the 15.35 pivot. This move essentially renders unattractive the risk\/reward balance for fading volatility ahead of this week&#8217;s Fed meeting. I wanted to wait until the meeting was a day or two away. The market either is getting in on this trade earlier and earlier and\/or <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/03\/11\/the-draghi-drubbing-redux\/\" target=\"_blank\">the latest liquidity pump of the European Central Bank (ECB)<\/a> had some kind of 1-day delay in delivering more courage to buyers.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33583\" aria-describedby=\"caption-attachment-33583\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_VIX.png\" rel=\"attachment wp-att-33583\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_VIX.png\" alt=\"The volatility index tumbles from its 200DMA and looks ready to return to the 15.35 pivot.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33583\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33583\" class=\"wp-caption-text\">The volatility index tumbles from its 200DMA and looks ready to return to the 15.35 pivot.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The Australian dollar (FXA) versus the Japanese yen (FXY) also confirmed bullishness with another burst higher. Like the S&#038;P 500, AUD\/JPY is testing 200DMA resistance. The currency pair has remained capped by this resistance since June, 2015. Simulatenous to a 200DMA breakout, AUD\/JPY has the opportunity to hurtle resistance from the January, 2016 highs for what could be a very bullish double breakout. I add one more small increment to my AUD\/JPY short as a hedge. Going forward, if AUD\/JPY breakouts, I will focus a lot more on aggressively trading long Aussie and short yen positions.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33584\" aria-describedby=\"caption-attachment-33584\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AUDJPY.png\" rel=\"attachment wp-att-33584\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AUDJPY.png\" alt=\"AUD\/JPY surged into critical resistance at its 200DMA. \" width=\"550\" height=\"375\" class=\"size-full wp-image-33584\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AUDJPY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AUDJPY-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33584\" class=\"wp-caption-text\">AUD\/JPY surged into critical resistance at its 200DMA.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>With a Fed meeting coming up, I will refrain from reading too much into the charts of individual stocks. However, I DO want to point out Amazon.com (AMZN). The stock is neatly wedged between 200DMA support and 50DMA resistance. I got a little ahead of myself on Friday by buying a call option to anticipate a breakout. Such a move could prove quite powerful. Similarly, if AMZN breaks down below its 200DMA support, an extended period of selling could resume. A potential Bollinger Band (BB) squeeze is adding to the growing drama. AMZN will be forced to make a move one way or the other, but I am also bracing for the first break to deliver the false signal before a reversal into the true break.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33585\" aria-describedby=\"caption-attachment-33585\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AMZN.png\" rel=\"attachment wp-att-33585\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AMZN.png\" alt=\"Amazon.com (AMZN) is positioned for a major move - up or down.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33585\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AMZN.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/03\/160311_AMZN-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33585\" class=\"wp-caption-text\">Amazon.com (AMZN) is positioned for a major move &#8211; up or down.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>&#8212; &#8211; &#8212;<\/p>\n<p>For readers interested in reviewing my trading rules for an oversold 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=$SPX&amp;p=D&amp;st=2015-09-11&amp;en=2016-03-11&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2015-09-11&amp;en=2016-03-11&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2015-09-11&amp;en=2016-03-11&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=2015-09-11&amp;en=2016-03-11&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=2015-09-11&amp;en=2016-03-11&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=2015-09-11&amp;en=2016-03-11&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=2015-09-11&amp;en=2016-03-11&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=2015-09-11&amp;en=2016-03-11&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=2015-09-11&amp;en=2016-03-11&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: short FB, long FB call options, long CAT put 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 (March 11, 2016) &#8211; Another Pre-Fed Critical Juncture for the Stock Market\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2016\/03\/13\/t2108-update-160311\/\">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":[482,20,599,490,512,511,62],"tags":[398,772,310,309,513,138,65,225,226,1597,303],"class_list":["post-33580","post","type-post","status-publish","format-standard","hentry","category-breakout","category-forex","category-internet","category-overbought","category-resistance","category-support","category-technical-analysis","tag-amzn","tag-audjpy","tag-australian-dollar","tag-fxa","tag-fxy","tag-japanese-yen","tag-sp-500","tag-t2107","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 (March 11, 2016) - Another Pre-Fed Critical Juncture for the Stock Market - 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\/03\/13\/t2108-update-160311\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (March 11, 2016) - Another Pre-Fed Critical Juncture for the Stock Market - 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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