{"id":6036,"date":"2011-07-12T01:00:31","date_gmt":"2011-07-12T05:00:31","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=6036"},"modified":"2011-07-12T01:11:00","modified_gmt":"2011-07-12T05:11:00","slug":"t2108-update-110711","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/07\/12\/t2108-update-110711\/","title":{"rendered":"T2108 Update &#8211; July 11, 2011 (Bearish Follow-Through)"},"content":{"rendered":"<p>(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. To learn more about it, see my <a href=\"http:\/\/www.drduru.com\/money\/T2108.htm\">T2108 Resource Page<\/a>.)<\/p>\n<p><strong>T2108 Status<\/strong>: 58%, overbought period ended at 5 days.<br \/>\n<strong>VIX Status<\/strong>: 18.<br \/>\n<strong>General (Short-term) Trading Call<\/strong>: Hold &#8211; if no shorts were opened during the overbought period, fade any rally tomorrow (July 12) {more below}.<\/p>\n<p><strong>Commentary<\/strong><\/p>\n<p>&#8220;<a href=\"http:\/\/drduru.com\/onetwentytwo\/2011\/07\/09\/t2108-update-110708\/\">Attack of the topping patterns<\/a>&#8221; was a very appropriate byline for Friday&#8217;s T2108 update. T2108 plummeted from 74% to 58% and created significant follow-through for all the bearish patterns I pointed out on Friday. In particular, those abandoned baby tops proved particularly &#8220;lethal.&#8221; Once again, aggressively shorting at overbought conditions paid off well. The S&#038;P 500 closed down 1.8% with the 50DMA providing cold comfort as the absolute low of the day. The index closed below the previous day&#8217;s low for the first time in 10 trading days. If you were following the more conservative rules for initiating bearish trades, the market has now given you the go-ahead. However, it is now best to wait for follow-through below the 50DMA and\/or fade the next rally. Either way, the conditions for shorting are obviously not as favorable as they were last week when the market&#8217;s over-extended rally gave many the false impression that the proverbial climb over the wall of worry was in full swing. <\/p>\n<p>The last overbought period lasted five days which was right at <a href=\"http:\/\/www.drduru.com\/money\/090104_T2108vsSP500.htm\">the median during of 4.5 days<\/a>. In other words, last week&#8217;s overbought signal was about as loud as we are likely ever to get with all the confirming evidence that was at hand. <\/p>\n<p>Now, we have to watch the currency markets more closely than ever. Over at least the past three or so years, tense times like these have produced extremely large swings in currencies (I dare not speculate just yet what sequence of swings I think we will see; currency traders can be particularly mercurial and capricious). These large swings should drive even more volatility in stocks as traders and institutions are forced to make rapid decisions about leverage and risk. &#8220;Monthly&#8221; options expire this week, and the process should provide even more kindling to this tumultuous mix of catalysts.<\/p>\n<p>If you were good enough to initiate shorts last week as recommended, take some profits if the market experiences another large swoon&#8230;even if T2108 has not yet dropped toward 30%. Do not get greedy; these profits will help you sit through any large volatility as we get more clarity on the likely direction for T2108. If you were stubborn enough to hold onto most of your bullish positions when I recommended selling, it is more urgent that you use the next rally to flush some of those away and to initiate some bearish positions. <\/p>\n<p>Today&#8217;s crazy chart of the day is LinkedIn (LNKD). The stock is still about 20% off its all-time highs, but it closed UP 1.1% today for its second highest close in the two months since the IPO. You might never guess the general stock market has suffered such angst in the past two days. You would certainly never guess that this stock could be be one of the most unloved stocks around with an insistent press and confident consensus stigmatizing the stock as ludicrously overvalued and auspiciously trapped in a bubble.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_6037\" aria-describedby=\"caption-attachment-6037\" style=\"width: 515px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2011\/07\/110711_LNKD.jpg\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2011\/07\/110711_LNKD.jpg\" alt=\"LinkedIn (LNKD) continues to defy the odds\" title=\"LinkedIn (LNKD) continues to defy the odds\" width=\"525\" height=\"468\" class=\"size-full wp-image-6037\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2011\/07\/110711_LNKD.jpg 525w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2011\/07\/110711_LNKD-300x267.jpg 300w\" sizes=\"auto, (max-width: 525px) 100vw, 525px\" \/><\/a><figcaption id=\"caption-attachment-6037\" class=\"wp-caption-text\">LinkedIn (LNKD) continues to defy the odds<\/figcaption><\/figure><br \/>\n<\/center><br \/>\n<\/p>\n<p><center><br \/>\n<em>Charts below are the <strong>latest<\/strong> snapshots of T2108 (and the S&#038;P 500)<\/em><br \/>\nRefresh browser if the charts are the same as the last T2108 update.<br \/>\n<\/p>\n<p><strong>Daily T2108 vs the S&#038;P 500<\/strong><br \/>\n<img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-daily_s.jpg\" width=\"525\" height=\"356\" alt=\"T2108 vs. the S&#038;P 500 (DAILY)\" title=\"T2108 vs. the S&#038;P 500 (DAILY)\"><\/p>\n<p>Black line: T2108 (measured on the right); Red line: S&#038;P 500 (for comparative purposes)<br \/>\n<\/center><\/p>\n<p><center><br \/>\n<strong>Weekly T2108<\/strong><br \/>\n<img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/www.drduru.com\/money\/charts\/T2108-weekly_s.jpg\" width=\"525\" height=\"354\" alt=\"Weekly T2108\" title=\"Weekly T2108\"><br \/>\n*<strong>All charts created using TeleChart:<\/strong> <a href=\"http:\/\/www.worden.com\/CURRENTAFPROMO.aspx?AFCODE=866\"><img decoding=\"async\" src=\"http:\/\/www.worden.com\/Content\/Banners\/images\/88x31.gif\"><\/a><br \/>\n<\/center><\/p>\n<p><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&#038;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 puts on SSO, long SDS<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(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: 58%, overbought period ended at 5 days. VIX Status: 18. General (Short-term) Trading Call: Hold &#8211; if no shorts were opened during the overbought period, fade any rally tomorrow &#8230; <a title=\"T2108 Update &#8211; July 11, 2011 (Bearish Follow-Through)\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2011\/07\/12\/t2108-update-110711\/\">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":[599,135,62],"tags":[629,579,65,226,1597],"class_list":["post-6036","post","type-post","status-publish","format-standard","hentry","category-internet","category-stock-market-trading","category-technical-analysis","tag-linkedin-corporation","tag-lnkd","tag-sp-500","tag-t2108","tag-technical-analysis"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>T2108 Update - July 11, 2011 (Bearish Follow-Through) - 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\/2011\/07\/12\/t2108-update-110711\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update - July 11, 2011 (Bearish Follow-Through) - 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]. To learn more about it, see my T2108 Resource Page.) T2108 Status: 58%, overbought period ended at 5 days. VIX Status: 18. General (Short-term) Trading Call: Hold &#8211; if no shorts were opened during the overbought period, fade any rally tomorrow ... Read more\" \/>\n<meta property=\"og:url\" content=\"https:\/\/drduru.com\/onetwentytwo\/2011\/07\/12\/t2108-update-110711\/\" \/>\n<meta property=\"og:site_name\" content=\"ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"article:published_time\" content=\"2011-07-12T05:00:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2011-07-12T05:11:00+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2011\/07\/110711_LNKD.jpg\" \/>\n<meta name=\"author\" content=\"Dr. Duru\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@drduru\" \/>\n<meta name=\"twitter:site\" content=\"@drduru\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Dr. Duru\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/drduru.com\\\/onetwentytwo\\\/2011\\\/07\\\/12\\\/t2108-update-110711\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/drduru.com\\\/onetwentytwo\\\/2011\\\/07\\\/12\\\/t2108-update-110711\\\/\"},\"author\":{\"name\":\"Dr. Duru\",\"@id\":\"https:\\\/\\\/drduru.com\\\/onetwentytwo\\\/#\\\/schema\\\/person\\\/d9569fde6c701b021a8d958f775be9a0\"},\"headline\":\"T2108 Update &#8211; 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