{"id":36901,"date":"2016-11-06T22:43:02","date_gmt":"2016-11-07T06:43:02","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=36901"},"modified":"2016-11-06T22:47:49","modified_gmt":"2016-11-07T06:47:49","slug":"t2108-update-161104","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2016\/11\/06\/t2108-update-161104\/","title":{"rendered":"T2108 Update (November 4, 2016) &#8211; A Second Bullish Divergence As the S&#038;P 500 Holds Critical Support"},"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:\/\/drduru.com\/onetwentytwo\/about\/t2108-resource-page\/\">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>: 23.2%<br \/>\n<strong>T2107 Status<\/strong>: 48.6%<br \/>\n<strong>VIX Status<\/strong>: 22.5 (was as low as 19.2)<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: cautiously bullish<br \/>\n<strong>Active T2108 periods<\/strong>: Day #180 over 20%, Day #6 under 30% (underperiod), Day #11 under  40%, Day #28 under 50%, Day #43 under 60%, Day #69 under 70%<\/p>\n<p><strong>Commentary<\/strong><br \/>\nI am keeping this piece relatively short because apparently <a href=\"http:\/\/seekingalpha.com\/news\/3221509-november-surprise-sends-futures-surging\" target=\"_blank\">futures are soaring on more Clinton email news<\/a>. I am assuming the stock market will get a strong open, but there is of course no guarantee on the sustainability of a strong open. However, based on two straight days of bullish divergence, I strongly suspect that bulls will keep up the pressure on Monday.<\/p>\n<p>On Thursday, November 3, <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/11\/03\/t2108-update-161103\/\" target=\"_blank\">I finally shifted the short-term trading call to a bullish bias<\/a>. I described how previous bearish divergences had resolved into noticeable selling along with the first, very slight, bullish divergence. The next day, another bullish divergence emerged even as the S&#038;P 500 (SPY) faded hard into <a href=\"http:\/\/www.marketwatch.com\/story\/what-happens-after-the-sp-500-falls-9-days-in-a-row-2016-11-04\" target=\"_blank\">a historic 9th straight day of selling<\/a> &#8211; such persistent selling has not happened since 1980. The good news is that the S&#038;P 500 valiantly held on to support at its 200-day moving average (DMA).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_36943\" aria-describedby=\"caption-attachment-36943\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_SP500.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_SP500.png\" alt=\"The S&amp;P 500 (SPY) lost a fraction for its 9th straight loss.\" width=\"550\" height=\"375\" class=\"size-full wp-image-36943\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_SP500.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_SP500-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-36943\" class=\"wp-caption-text\">The S&#038;P 500 (SPY) lost a fraction for its 9th straight loss.<\/figcaption><\/figure><br \/>\n<figure id=\"attachment_36950\" aria-describedby=\"caption-attachment-36950\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_NASDAQ.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_NASDAQ.png\" alt=\"The NASDAQ looks ready to retest 200DMA support soon given the persistent selling since its 50DMA meltdown.\" width=\"550\" height=\"375\" class=\"size-full wp-image-36950\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_NASDAQ.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_NASDAQ-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-36950\" class=\"wp-caption-text\">The NASDAQ looks ready to retest 200DMA support soon given the persistent selling since its 50DMA meltdown.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>T2108, the percentage of stocks trading above their respective 40DMAs, faded along with the S&#038;P 500. However, T2108&#8217;s surge on the day was so strong that my favorite technical indicator finished the day with a gain from 22.3% to 23.2%. The stock market looks like it is doing its best to stay out of oversold territory (below 20%).<\/p>\n<p><center><br \/>\n<figure id=\"attachment_36944\" aria-describedby=\"caption-attachment-36944\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_T2108.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_T2108.png\" alt=\"T2108s descent has abruptly stopped just above oversold territory.\" width=\"550\" height=\"375\" class=\"size-full wp-image-36944\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_T2108.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_T2108-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-36944\" class=\"wp-caption-text\">T2108s descent has abruptly stopped just above oversold territory.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The bullish divergence between T2108 and the S&#038;P 500 will take on definitive importance if the stock market gaps up to start the week and holds that gap. At that point, I would drop the &#8220;cautiously&#8221; from my bullish trading bias&#8230;especially given the technicals will suggest a successful test of 200DMA support.<\/p>\n<p>Catepillar (CAT) printed one of the strongest symbols of bullish divergence on Friday with a strong 1.3% gain. Trading volume was above average and CAT closed near its high for the day.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_36954\" aria-describedby=\"caption-attachment-36954\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_CAT.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_CAT.png\" alt=\"Caterpillar (CAT) contributed to the bullish divergence that ended last week&#039;s trading.\" width=\"550\" height=\"375\" class=\"size-full wp-image-36954\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_CAT.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_CAT-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-36954\" class=\"wp-caption-text\">Caterpillar (CAT) contributed to the bullish divergence that ended last week&#8217;s trading.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>As the stock market rallied on Friday, the volatility index, the VIX dropped far enough to reverse all of Thursday&#8217;s gains. At the close, the VIX rallied for a positive gain and ended the week with a very wild swing.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_36945\" aria-describedby=\"caption-attachment-36945\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_VIX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_VIX.png\" alt=\"The volatility index, the VIX, closed the week with its 9th straight up day and a 73% gain from the trough.\" width=\"550\" height=\"375\" class=\"size-full wp-image-36945\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_VIX.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_VIX-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-36945\" class=\"wp-caption-text\">The volatility index, the VIX, closed the week with its 9th straight up day and a 73% gain from the trough.<\/figcaption><\/figure><br \/>\n<br \/>\n<figure id=\"attachment_36947\" aria-describedby=\"caption-attachment-36947\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_UVXY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_UVXY.png\" alt=\"ProShares Ultra VIX Short-Term Futures (UVXY) is holding onto a 50DMA breakout thanks to a resilient VIX.\" width=\"550\" height=\"375\" class=\"size-full wp-image-36947\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_UVXY.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_UVXY-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-36947\" class=\"wp-caption-text\">ProShares Ultra VIX Short-Term Futures (UVXY) is holding onto a 50DMA breakout thanks to a resilient VIX.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>I have two main trades of note.<\/p>\n<p>I finally sold my shares of ProShares UltraShort S&#038;P 500 (SDS) and locked in the profits. Per <a href=\"http:\/\/drduru.com\/onetwentytwo\/t2108-resource-page\/\" target=\"_blank\">my trading rules for oversold conditions<\/a>, now is the time to start earnestly closing out bearish positions. SDS was on the top of my list. Next on my trading list was Apple (AAPL).<\/p>\n<p>I have not <a href=\"http:\/\/drduru.com\/onetwentytwo\/2016\/09\/25\/t2108-update-160923\/\" target=\"_blank\">covered AAPL since late September<\/a>. I did not post a pre-earnings trading call. I did not even acknowledge the post-earnings gap down that appeared to etch a fresh top in AAPL and reversed all of its Samsung-related gains. AAPL broke through 50DMA support on high volume to start November trading. AAPL closed the week with a complete reversal of the gains from the iPhone 7 breakout. With a bullish trading bias in hand, I thought this was as good a time as any to get back to trading AAPL options. I am targeting a test of 50DMA resistance around $112.50. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_36948\" aria-describedby=\"caption-attachment-36948\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_AAPL.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_AAPL.png\" alt=\"Apple (AAPL) broke down post-earnings. Can it avoid a retest of 200DMA support?\" width=\"550\" height=\"375\" class=\"size-full wp-image-36948\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_AAPL.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2016\/11\/161104_AAPL-300x205.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-36948\" class=\"wp-caption-text\">Apple (AAPL) broke down post-earnings. Can it avoid a retest of 200DMA support?<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>&#8212; &#8211; &#8212;<br \/>\n<center><br \/>\n<strong>FOLLOW Dr. Duru&#8217;s commentary on financial markets via <a href=\"https:\/\/feedburner.google.com\/fb\/a\/mailverify?uri=onetwentytwo\" target=\"_blank\">email<\/a>, <a href=\"http:\/\/stocktwits.com\/DrDuru\" target=\"_blank\">StockTwits<\/a>, <a href=\"https:\/\/twitter.com\/DrDuru\" target=\"_blank\">Twitter<\/a>, and even <a href=\"https:\/\/www.instagram.com\/drduru_market_breadth\/\" target=\"_blank\">Instagram<\/a>!<\/strong><br \/>\n<\/center><\/p>\n<p><center><br \/>\n<strong>Daily T2108 vs the S&amp;P 500<\/strong><br \/>\n<a href=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily_s.png\"><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\" \/><\/a><\/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\" \/><\/a><br \/>\n*<strong>All charts created using <\/strong><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=\"hhttp:\/\/drduru.com\/onetwentytwo\/about\/t2108-resource-page\/\">The T2108 Resource Page<\/a><\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: long UVXY shares and short UVXY call and long UVXY put options, long AAPL call options, long CAT call 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 (November 4, 2016) &#8211; A Second Bullish Divergence As the S&#038;P 500 Holds Critical Support\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2016\/11\/06\/t2108-update-161104\/\">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":[219,43,491,512,511,62,1304],"tags":[250,64,413,535,65,362,226,1092,303],"class_list":["post-36901","post","type-post","status-publish","format-standard","hentry","category-high-tech","category-industrial-sector","category-oversold","category-resistance","category-support","category-technical-analysis","category-top","tag-aapl","tag-cat","tag-nasdaq","tag-qqq","tag-sp-500","tag-spy","tag-t2108","tag-uvxy","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 (November 4, 2016) - A Second Bullish Divergence As the S&amp;P 500 Holds Critical Support - 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\/11\/06\/t2108-update-161104\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update (November 4, 2016) - A Second Bullish Divergence As the S&amp;P 500 Holds Critical Support - 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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