{"id":7749,"date":"2011-10-17T22:57:19","date_gmt":"2011-10-18T02:57:19","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=7749"},"modified":"2011-10-17T22:57:19","modified_gmt":"2011-10-18T02:57:19","slug":"t2108-update-111017","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/10\/17\/t2108-update-111017\/","title":{"rendered":"T2108 Update – October 17, 2011 (Rejection)"},"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>: 49%
\nVIX Status<\/strong>: 33 (rose back into previous trading range)
\nGeneral (Short-term) Trading Call<\/strong>: Hold<\/p>\n

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

On Friday’s update<\/a>, I had great news and words of caution. Today, I am not able to find any good news except that I issued some words of caution before today’s sell-off. Oh, and selling volume was just as light as Friday’s buying volume. In the last T2108 Update, I explained my trading call as follows:<\/p>\n

“My trading call in this post recognizes there is a high enough probability that the trading range holds to warrant taking some profits here.”<\/p><\/blockquote>\n

I figured with overbought stochastics the S&P 500<\/a> would pull back a bit ahead of continuing last week’s rally. Today’s 1.9% plunge went beyond a simple correction. It erased all of Friday’s gains and then some. T2108 plummeted 13 percentage points to 49% in a move often reserved for a transition out of overbought conditions. Overall, Monday’s trading was a convincing rejection of the notion that the market is ready for a true breakout above the previous trading range.<\/p>\n

Even more ominously, the VIX<\/a> (the volatility index) AND VXX<\/a>, the iPath S&P 500 VIX Short-Term Futures, recovered from Friday’s technical breakdowns. The VIX surged an amazing 18% to place it right back into the previous trading range. Similarly, VXX popped about 10% to place it back above its 50DMA. Recall well that the S&P 500’s last rally came after a false breakdown from the previous trading range. While Friday’s breakout was marginal, there were several bullish signals forcefully converging to support a more convincing breakout. A continuation of Monday’s pullback will represent a significant setback that will signal the trading range is alive and well.<\/p>\n

As I tweeted<\/a> earlier in the day, the strength in VXX convinced me to hold onto my October calls on the index (at least one more day). The trading call remains a hold assuming that the trading portfolio still includes a few bearish positions. T2108 is back in “neutral” territory, so I will not be making any major adjustments to the T2108 trading portfolio here. I am still looking for a rebound to overbought conditions before another trip to oversold conditions. If the S&P 500 closes below its 50DMA (around 1172), and T2108 drops to 30%, I may be forced to change my bullish outlook.<\/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<\/a><\/p>\n

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


\nWeekly T2108<\/strong>
\n\"Weekly
\n*T2108 charts created using freestockcharts.com<\/a><\/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, long puts and calls on VXX<\/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: 49% VIX Status: 33 (rose back into previous trading range) General (Short-term) Trading Call: Hold Commentary On … 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":[177,65,226,1597,303,178,120],"class_list":["post-7749","post","type-post","status-publish","format-standard","hentry","category-stock-market-trading","category-technical-analysis","tag-ipath-sp-500-vix-short-term-futures","tag-sp-500","tag-t2108","tag-technical-analysis","tag-vix","tag-volatility","tag-vxx"],"yoast_head":"\nT2108 Update - October 17, 2011 (Rejection) - 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\/10\/17\/t2108-update-111017\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"T2108 Update - October 17, 2011 (Rejection) - 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. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag.) T2108 Status: 49% VIX Status: 33 (rose back into previous trading range) General (Short-term) Trading Call: Hold Commentary On ... 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