{"id":8338,"date":"2011-11-21T22:54:18","date_gmt":"2011-11-22T03:54:18","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=8338"},"modified":"2011-11-22T06:08:49","modified_gmt":"2011-11-22T11:08:49","slug":"t2108-update-111121","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/11\/21\/t2108-update-111121\/","title":{"rendered":"T2108 Update – November 21, 2011 (Decisive Plunge)"},"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. T2108-related trades and other trades are posted on twitter using the #120trade hashtag)<\/p>\n

T2108 Status<\/strong>: 39%
\nVIX Status<\/strong>: 33
\nGeneral (Short-term) Trading Call<\/strong>: Close at least one bearish trade. Prepare to go long VXX. Otherwise hold.<\/p>\n

Commentary<\/strong>
\nThe selling picked up again today as T2108 plunged an amazing 19 percentage points to 39%. The S&P 500<\/a> took a decisive plunge below the presumed support at the 50DMA. This tenuous support lasted all of one day, and it broke just as I warned was likely for Friday’s T2108 Update<\/a>. My forecast for tame volatility this week seems to be playing out as well. However, given the S&P 500 lost as much as 2.5% at one point, I am still a bit surprised that the day ended with only a 2.8% gain for the VIX<\/a> and 1.4% gain for VXX<\/a>. On twitter<\/a>, I called it “volatility fatigue”.<\/p>\n

Today’s trading action firmly puts the S&P 500 in bearish territory. The presumed support of the 50DMA has quickly turned into presumed resistance, at least until T2108 visits oversold territory again. On twitter, I placed my downside target for T2108 at 20-30%. As usual, I will revisit this forecast as needed. The downside forecast means I am much more interested in fading rallies than buying dips for now. In particular, I want to get long VXX again on a retest of the 50DMA resistance. Finally, I am still holding 60% of my position in SDS which I initiated during the T2108-overbought period.<\/p>\n

There were many significant technical developments in individual stocks. I will point out just a few here. One theme is that favorite momentum stocks and much-loved stocks took big to oversized hits today.<\/p>\n