{"id":33959,"date":"2016-04-12T22:57:05","date_gmt":"2016-04-13T05:57:05","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=33959"},"modified":"2016-04-12T23:22:51","modified_gmt":"2016-04-13T06:22:51","slug":"t2108-update-160412","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/04\/12\/t2108-update-160412\/","title":{"rendered":"T2108 Update (April 12, 2016) &#8211; Challenging the Slippery Slope"},"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>: 78.9%<br \/>\n<strong>T2107 Status<\/strong>: 48.7%  (10-month high)<br \/>\n<strong>VIX Status<\/strong>: 14.9<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: neutral<br \/>\n<strong>Active T2108 periods<\/strong>: Day #42 over 20%, Day #41 over 30%, Day #38 over 40%, Day #35 over 50%, Day #31 over 60%, Day #30 over 70% (overbought)<\/p>\n<p><strong>Commentary<\/strong><br \/>\nThe S&#038;P 500 (SPY) is making a bid to overcome the slippery slope I wrote about in <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/04\/12\/t2108-update-160411\/\" target=\"_blank\">the last T2108 Update<\/a>. The index closed just a touch above the previous short-term downtrend line.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33960\" aria-describedby=\"caption-attachment-33960\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_SP500.png\" rel=\"attachment wp-att-33960\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_SP500.png\" alt=\"The S&amp;P 500 bounces back. It&#039;s starting to look like an extended period of churn.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33960\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33960\" class=\"wp-caption-text\">The S&#038;P 500 bounces back. It&#8217;s starting to look like an extended period of churn.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>T2108, the percentage of stocks trading above their respective 40DMAs, also made an encouraging comeback by bouncing to a close of 78.9%. More importantly, T2107, the percentage of stocks trading above their respective 200DMAs, managed to notch a 10-month high even as the S&#038;P 500 has managed to make minimal progress since late March.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33962\" aria-describedby=\"caption-attachment-33962\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2108.png\" rel=\"attachment wp-att-33962\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2108.png\" alt=\"T2108 comes alive again. Can it return to the lofty heights of the 80s?\" width=\"550\" height=\"375\" class=\"size-full wp-image-33962\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2108.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2108-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33962\" class=\"wp-caption-text\">T2108 comes alive again. Can it return to the lofty heights of the 80s?<\/figcaption><\/figure><\/p>\n<p><figure id=\"attachment_33961\" aria-describedby=\"caption-attachment-33961\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2107.png\" rel=\"attachment wp-att-33961\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2107.png\" alt=\"T2107 breaks out to a fresh 10-month high. This indicator now carries the torch representing the market&#039;s underlying strength.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33961\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2107.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_T2107-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33961\" class=\"wp-caption-text\">T2107 breaks out to a fresh 10-month high. This indicator now carries the torch representing the market&#8217;s underlying strength.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>T2107 is now the torchbearer for underlying market strength. While the S&#038;P 500 and T2108 have taken me to the edge of bearishness twice in the past 2 weeks or so, T2107 has never provided the final confirmation. I will change my trading call from neutral and back to (cautiously?) bullish once\/if the S&#038;P 500 breaks above teh last high set on April 1, 2016.<\/p>\n<p>Encana Corporation (ECA) is a Canadian oil and gas company. ECA is the kind of stock that continues to drive T2107 to new heights in this extended overbought rally. The market beat down stocks like ECA for so long and so badly that the 200DMAs were racing to catch-up to the downtrend. I strongly suspect the double-bottom for oil has created a lot of these situations. Today, ECA FINALLY broke out above this critical line of resistance. ECA last traded above its 200DMA around October, 2014&#8230;right as the oil patch was falling off a cliff.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33964\" aria-describedby=\"caption-attachment-33964\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA.png\" rel=\"attachment wp-att-33964\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA.png\" alt=\"Encana Corporation (ECA) makes a bullish breakout above 200DMA resistance and has now more than doubled in price since its bottom.\" width=\"550\" height=\"375\" class=\"size-full wp-image-33964\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33964\" class=\"wp-caption-text\">Encana Corporation (ECA) makes a bullish breakout above 200DMA resistance and has now more than doubled in price since its bottom.<\/figcaption><\/figure><\/p>\n<p><figure id=\"attachment_33963\" aria-describedby=\"caption-attachment-33963\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA-monthly.png\" rel=\"attachment wp-att-33963\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA-monthly.png\" alt=\"This monthly chart is a stark reminder that ECA&#039;s gains off the bottom are still peanuts compared to where it used to trade not long ago!. The next question is how sustainable is this sharp V-pattern...\" width=\"550\" height=\"375\" class=\"size-full wp-image-33963\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA-monthly.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_ECA-monthly-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33963\" class=\"wp-caption-text\">This monthly chart is a stark reminder that ECA&#8217;s gains off the bottom are still peanuts compared to where it used to trade not long ago!. The next question is how sustainable is this sharp V-pattern&#8230;<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>Finally, demonstrating the market&#8217;s more relaxed mood, the volatility index, the VIX, returned to the 15.35 pivot and closed underneath. Like the S&#038;P 500, the VIX is starting to look like an extended period of churn wiating for a major move up or down.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_33965\" aria-describedby=\"caption-attachment-33965\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_VIX.png\" rel=\"attachment wp-att-33965\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_VIX.png\" alt=\"Is the VIX settling in for churn?\" width=\"550\" height=\"375\" class=\"size-full wp-image-33965\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/04\/160412_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-33965\" class=\"wp-caption-text\">Is the VIX settling in for churn?<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>With earnings season underway, I am much more interested in playing the stories on individual stocks going into and\/or coming out of earnings (but not THROUGH earnings) than in playing the churn on the S&#038;P 500 or the NASDAQ (not shown here). <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/04\/12\/t2108-update-160411\/\" target=\"_blank\">The last T2108 update<\/a> showed a sample of charts on my radar. Today, I pulled the trigger again on iShares Nasdaq Biotechnology (IBB) and will add more on a strong open Wednesday (April 13, 2016). Facebook (FB) also managed a bounce off its 50DMA &#8211; feeble, but still strong enough to warrant a swing play on call options for some follow-through. I still harbor doubts about the sustainability of its support at the 50DMA.<\/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=$SPX&amp;p=D&amp;st=2015-10-11&amp;en=2016-04-11&amp;id=p14085208538\" target=\"_blank\">S&amp;P 500<\/a> or <a title=\"6-month chart of SPY\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=SPY&amp;p=D&amp;st=2015-10-11&amp;en=2016-04-11&amp;id=p14085208538\" target=\"_blank\">SPY<\/a><br \/>\n<a title=\"6-month chart of the U.S. dollar\" href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$USD&amp;p=D&amp;st=2015-10-11&amp;en=2016-04-11&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=2015-10-11&amp;en=2016-04-11&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=2015-10-11&amp;en=2016-04-11&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=2015-10-11&amp;en=2016-04-11&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=2015-10-11&amp;en=2016-04-11&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=2015-10-11&amp;en=2016-04-11&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=2015-10-11&amp;en=2016-04-11&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: long ECA, short FB, long FB calls, long IBB calls<\/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 (April 12, 2016) &#8211; Challenging the Slippery Slope\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2016\/04\/12\/t2108-update-160412\/\">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":[482,199,62],"tags":[700,958,955,536,65,225,226,303],"class_list":["post-33959","post","type-post","status-publish","format-standard","hentry","category-breakout","category-commodities","category-technical-analysis","tag-eca","tag-encana","tag-natural-gas-2","tag-oil-2","tag-sp-500","tag-t2107","tag-t2108","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 (April 12, 2016) - Challenging the Slippery Slope - 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\/04\/12\/t2108-update-160412\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (April 12, 2016) - Challenging the Slippery Slope - 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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