{"id":7055,"date":"2011-09-02T05:12:38","date_gmt":"2011-09-02T09:12:38","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=7055"},"modified":"2011-09-02T05:25:10","modified_gmt":"2011-09-02T09:25:10","slug":"t2108-update-110901","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/09\/02\/t2108-update-110901\/","title":{"rendered":"T2108 Update – September 1, 2011 (Return of the franc)"},"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>. You can follow real-time T2108 commentary<\/a> on twitter using the #T2108 hashtag.)<\/p>\n

T2108 Status<\/strong>: 31%
\nVIX Status<\/strong>: 32
\nGeneral (Short-term) Trading Call<\/strong>: Hold (see below for more details).<\/p>\n

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

The weight of overbought stochastics<\/a> finally pressured the stock market downward. The good news is that the S&P 500 “only” dropped 1.2%. It could have been much worse given recent volatility. Selling volume was also uncharacteristically light (the lowest in about a month – see chart here<\/a>). I am guessing that the relatively mild selling is a by-product of the recently strong behavior in T2108. (Yes, I am STILL largely ignoring the headlines and the temporary perturbations they are causing in general stock market behavior).<\/p>\n

As I mentioned in the last T2108 update, I am watching currency markets more closely for potential clues into the stock market’s next moves. The Swiss franc was strong again. As I type, the franc is gaining even more momentum. The return to the franc has been at least partially driven by the strangely abrupt change in heart by Swiss authorities in their efforts to weaken its currency. The Swiss Economy Minister seemed to signal that further intervention is not likely<\/a>: “We’ll have to keep living with the strong franc for some time.” His statements delivered the green light traders needed.<\/p>\n

As long as traders are flocking to the franc, we should assume that the stock market is vulnerable to further downside. However, the relationship between franc strength and stock market weakness is not straightforward. The franc has been rallying against the dollar nearly unabated since the summer of 2010. During this time, the stock market was also in rally mode for all but the last four months…presumably benefiting from the weaker dollar. In other words, the franc is not a timing indicator for short-term trades; it is more like a canary in a coal mine. Note well that the franc’s rally ended in a parabolic move that exactly marked the absolute bottom of the recent sell-off. (Click here for an extended chart of FXF<\/a>, the Rydex CurrencyShares Swiss Franc Trust ETF).<\/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 shares and calls on SSO, long VXX puts, long SDS, net long Swiss franc<\/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. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag.) T2108 Status: 31% VIX Status: 32 General (Short-term) Trading Call: Hold (see below for more details). Commentary The weight … 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":[20,135,62],"tags":[459,715,65,226,1597],"class_list":["post-7055","post","type-post","status-publish","format-standard","hentry","category-forex","category-stock-market-trading","category-technical-analysis","tag-fxf","tag-rydex-currencyshares-swiss-franc-trust-etf","tag-sp-500","tag-t2108","tag-technical-analysis"],"yoast_head":"\nT2108 Update - September 1, 2011 (Return of the franc) - 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\/09\/02\/t2108-update-110901\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update - September 1, 2011 (Return of the franc) - 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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