{"id":36841,"date":"2016-11-01T20:33:17","date_gmt":"2016-11-02T03:33:17","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=36841"},"modified":"2016-11-02T00:21:23","modified_gmt":"2016-11-02T07:21:23","slug":"t2108-update-161101","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/11\/01\/t2108-update-161101\/","title":{"rendered":"T2108 Update (November 1, 2016) – Divergences Confirmed: Stock Market Sags to the Edge of Oversold"},"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>: 25.2% (as low as 22.9%)
\nT2107 Status<\/strong>: 52.3%
\nVIX Status<\/strong>: 18.6 (an 8.8% gain, the VIX was as high as 20.4)
\nGeneral (Short-term) Trading Call<\/strong>: neutral (see caveats below)
\nActive T2108 periods<\/strong>: Day #177 over 20%, Day #3 under 30% (underperiod), Day #8 under 40%, Day #25 under 50%, Day #40 under 60%, Day #66 under 70%<\/p>\n

Commentary<\/strong>
\nIn my last T2108 Update<\/a>, I described Friday’s rush to sell stocks in the wake of political headlines as overdone and an opportunity to fade volatility. I made this claim even while acknowledging that growing divergences in the stock market significantly raised the odds of an imminent tumble toward or into oversold territory for the stock market. I was also a little hesitant to execute the fade because the volatility index, the VIX, had just popped over the 15.35 pivot and positioned itself to launch even higher. Sure enough, the VIX has gained two more days for a total of 6 straight days. The VIX is up 42.5% since the Monday of last week. At today’s intraday high, the VIX had gained 56.9%.<\/p>\n


\n
\"The<\/a>
The volatility index, the VIX, soared past the critical 20 level before fading hard.<\/figcaption><\/figure>
\n<\/center><\/p>\n

As a reminder, a VIX of 20 is conventionally considered “high.” September’s burst of volatility could only produce an above 20 reading for part of the day. Brexit trading swivled around 20 before completely imploding. With T2108 – the percentage of stocks trading above their respective 40-day moving averages (DMAs) – tumbling toward oversold levels, I went back to work fading volatility. <\/p>\n

<\/p>\n
\n

%stocks > 40DMA ~ 26%. Approaching oversold (20%). Close here would be lowest since Feb. Post-Brexit intraday low was 24.5%. #T2108<\/a> $SPY<\/a><\/p>\n

— Dr. Duru (@DrDuru) November 1, 2016<\/a><\/p><\/blockquote>\n