{"id":34379,"date":"2016-05-11T02:01:13","date_gmt":"2016-05-11T09:01:13","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=34379"},"modified":"2016-05-11T02:02:09","modified_gmt":"2016-05-11T09:02:09","slug":"t2108-update-160510","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/05\/11\/t2108-update-160510\/","title":{"rendered":"T2108 Update (May 10, 2016) – Buyers Move to Reclaim the Stock Market"},"content":{"rendered":"

(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<\/a>. You can follow real-time T2108 commentary<\/a> on twitter using the #T2108 hashtag. T2108-related trades and other trades are occasionally posted on twitter using the #120trade hashtag<\/a>. T2107 measures the percentage of stocks trading above their respective 200DMAs)<\/p>\n

T2108 Status<\/strong>: 66.8%
\nT2107 Status<\/strong>: 59.3%
\nVIX Status<\/strong>: 13.6
\nGeneral (Short-term) Trading Call<\/strong>: cautiously bearish
\nActive T2108 periods<\/strong>: Day #61 over 20%, Day #60 over 30%, Day #57 over 40%, Day #54 over 50%, Day #1 over 60% (overperiod), Day #6 under 70%<\/p>\n

Commentary<\/strong>
\nThe case for the buyers suddenly got a little stronger. The line in the sand they drew last week<\/a> just got a little deeper.<\/p>\n

T2108, the percentage of stocks trading above their respective 40-day moving averages (DMAs), closed at 66.8%, a mere stone’s throw from overbought status (above 70%). T2107, the percentage of stocks trading above their respective 200DMAs, jumped up to 59.3%. Together, these indicators helped confirm the bullish move of the S&P 500 (SPY) which gained 1.3% and confirmed 50DMA support.<\/p>\n


\n
\"T2108<\/a>
T2108 jumps back toward overbought territory<\/figcaption><\/figure><\/p>\n
\"T2107<\/a>
T2107 looks ready to re-establish its primary uptrend.<\/figcaption><\/figure>\n

\"The<\/a>
The S&P 500 (SPY) prints a solid gain that confirms the 50DMA as support.<\/figcaption><\/figure>
\n<\/center><\/p>\n

The rally day delivered a strong 1.3% gain to the NASDAQ (QQQ). This third day of gains positioned the tech-heavy index for a test of MAJOR resistance converging at its 20, 50 AND 200DMAs. This is a critical<\/strong> test as a breakout would confirm a return of advantage to the buyers.<\/p>\n


\n
\"The<\/a>
The NASDAQ (QQQ) is working on reversing a major technical breakdown.<\/figcaption><\/figure>
\n<\/center><\/p>\n

The volatility index, the VIX, fell from the 15.35 pivot and closed just above recent lows. This move demonstrates the power of buyers but also puts the VIX back in an area from which it has tended to bounce. <\/p>\n


\n
\"The<\/a>
The volatility index drops 6.5% toward recent lows.<\/figcaption><\/figure>
\n<\/center><\/p>\n

This rally caught me a bit off-guard. Technically, I should have bought the open for the S&P 500 given the apparent confirmation of 50DMA support. However, my short-term trading call was “cautiously bearish”, so I was watching for a fresh breakdown of support instead. I felt better after watching Tuesday’s segment for Nightly Business Report (NBR) where Dominic Chu reported that floor traders were baffled by the day’s rally. OF course, he and the producers did consult the charts which provided a potentially simple answer. Chu tossed oil into the ring just because it is a usual suspect. Traders reached for a narrative resting on a slightly better than expected earnings season. The most interesting and perhaps compelling reach for an answer: McDonald’s (MCD), Johnson & Johnson (JNJ), and Home Depot (HD). These three stocks all hit new all-time highs, are major components of the Dow Industrials (DIA), AND sport yields higher than the 2% offered by 10-year Treasuries. Yep, THAT is how hard it was to find a good headline to explain today’s rally.<\/p>\n

Maybe a bounce from support is explanation enough? You can see the segment called the “Head-Scratching Rally<\/a>” around the 5:00 mark in the video below. <\/p>\n


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