{"id":6357,"date":"2011-07-29T02:56:26","date_gmt":"2011-07-29T06:56:26","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=6357"},"modified":"2011-07-29T02:56:26","modified_gmt":"2011-07-29T06:56:26","slug":"t2108-update-110728","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/07\/29\/t2108-update-110728\/","title":{"rendered":"T2108 Update – July 28, 2011 (Forecast Hit)"},"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>: 33%.
\nVIX Status<\/strong>: 24.0
\nGeneral (Short-term) Trading Call<\/strong>: Hold. Continue identifying potential bullish positions. Start closing bearish positions on next market sell-off from current levels.<\/p>\n

Commentary<\/strong><\/p>\n

T2108 dropped slightly to 33% and hit my original forecast for T2108 to hit the lower 30s. It was certainly not the path I had in mind, but here we are. The big question is what is next? Based on today’s weak close, and a 200DMA begging to get retested, I am adjusting my T2108 forecast downward for this cycle to a true oversold reading of 20% or lower. (Important reminder: since the March, 2009 lows, the stock market has generally found a bottom when T2108 approached 30%).<\/p>\n

The S&P 500 dropped 0.3% to 1300. It was up as much as 1% at the day’s highs. This strong fade confirms the new strength of the sellers (or, better yet, the lack of conviction in buyers). Today’s behavior is a main reason I am now expecting T2108 to hit true oversold levels very soon. <\/p>\n

The volatility index, VIX, pushed higher to close at another 4-month high. The index looks like it is ready to make one of those classic large surges higher. <\/p>\n

Overall, we have all the ingredients for a classic rush to oversold conditions: T2108 plunge to 20% or below, the S&P 500 retesting or even breaking the 200DMA (1.2% away), and a volatility surge. Given how close we are to this scenario, I continue to recommend getting a shopping list ready for making fresh bullish trades. Traders should also start closing out bearish positions on the next sell-off in the market. I am fully aware of how difficult these actions will be given the screaming headlines about the debt ceiling debate! All I can do is remind traders that the T2108 Update is about executing on simple rules, holistically managing risks, and avoiding the emotional tricks and traps that weighty headlines can produce.<\/p>\n

On the bearish side, traders should duly note that a retest of the 200DMA still keeps the S&P 500 above the June and March lows. Despite the intensity of selling in June, the S&P 500 never traded below the intraday lows from March. The index also never closed below March’s lowest close. Needless to say, this fact could represent unfinished business for August.<\/p>\n

(For this post, see stockcharts.com for chart updates: S&P 500<\/a>, VIX<\/a>)<\/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 puts on SSO, long SDS, long AAPL call spread<\/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: 33%. VIX Status: 24.0 General (Short-term) Trading Call: Hold. Continue identifying potential bullish positions. Start closing bearish positions on next market sell-off from current levels. Commentary T2108 dropped slightly … 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":[135,62],"tags":[65,226,1597],"class_list":["post-6357","post","type-post","status-publish","format-standard","hentry","category-stock-market-trading","category-technical-analysis","tag-sp-500","tag-t2108","tag-technical-analysis"],"yoast_head":"\nT2108 Update - July 28, 2011 (Forecast Hit) - 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\/29\/t2108-update-110728\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update - July 28, 2011 (Forecast Hit) - 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]. 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