{"id":5295,"date":"2011-06-03T20:11:09","date_gmt":"2011-06-04T00:11:09","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=5295"},"modified":"2011-06-03T20:11:37","modified_gmt":"2011-06-04T00:11:37","slug":"t2108-update-110603","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/06\/03\/t2108-update-110603\/","title":{"rendered":"T2108 Update: June 3, 2011"},"content":{"rendered":"

(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. To learn more about it, see my T2108 Resource Page<\/a>.)<\/p>\n

T2108 Status<\/strong>: 37% and Neutral.
\nGeneral Trading Call<\/strong>: Hold. Cover some<\/strong> shorts.<\/p>\n

Commentary<\/strong>
\nLooks like my switch back to bearish expectations<\/a> proved timely as T2108 dropped to 37% and back into my target range of 30-40% for the down cycle. Also as I anticipated, the S&P 500 finally closed below the May low (losing 1% on the day). The index even closed below April’s closing low and is only 6 points away from retesting April’s intra-day low. The S&P 500 is now firmly back in the middle of the downtrend that started in early May.<\/p>\n

I closed out my June-dated SSO puts as the market dropped at the open. After it appeared the market would close below the May low, I pulled the trigger on my longer-term bearish bet: a SSO Sept put spread. I hope to write more about this positioning in the near future. In the meantime, I am still tracking the oscillations from T2108 and making trading calls accordingly.<\/p>\n

Today’s trading call to start covering shorts is in anticipation of the market finding a (short-term) bottom once T2108 hits around 30%. Again, since the March, 2009 lows, the stock market has very rarely hit the 20% oversold threshold. Instead, sell-offs have found stop signs around 30%.<\/p>\n

I will be writing a separate post dedicated to the dollar. The dollar was slammed today but it did NOT translate into stock market strength. This behavior could signify a turning point in the financial markets with bets piling up against America’s economic health. I switched my positions to net long the dollar in expectation of a quick relief rally before the lowly dollar restarts the fresh plunge that seems underway.<\/p>\n


\nCharts below are the latest<\/strong> snapshots of T2108 (and the S&P 500)<\/em>
\nRefresh browser if the charts are the same as the last T2108 update.
\n<\/p>\n

Daily T2108 vs the S&P 500<\/strong>
\n\"T2108<\/p>\n

Black line: T2108 (measured on the right); Red line: S&P 500 (for comparative purposes)
\n<\/center><\/p>\n


\nWeekly T2108<\/strong>
\n\"Weekly
\n*All charts created using TeleChart:<\/strong> <\/a>
\n<\/center><\/p>\n

Related links:<\/strong>
\nThe T2108 Resource Page<\/a>
\nExpanded daily chart of T2108 versus the S&P 500<\/a>
\nExpanded weekly chart of T2108 <\/a><\/p>\n

Be careful out there!<\/p>\n

Full disclosure: long SSO puts, net long short Swiss franc, net long Japanese yen, net long U.S. dollar, net short British pound, net short the euro<\/p>\n","protected":false},"excerpt":{"rendered":"

(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. To learn more about it, see my T2108 Resource Page.) T2108 Status: 37% and Neutral. General Trading Call: Hold. Cover some shorts. 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