{"id":8366,"date":"2011-11-24T14:37:19","date_gmt":"2011-11-24T19:37:19","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=8366"},"modified":"2011-11-24T15:59:49","modified_gmt":"2011-11-24T20:59:49","slug":"t2108-update-111123","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2011\/11\/24\/t2108-update-111123\/","title":{"rendered":"T2108 Update – November 23, 2011 (Almost Oversold and Even More Bearish)"},"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>: 25%
\nVIX Status<\/strong>: 34
\nGeneral (Short-term) Trading Call<\/strong>: Close at least one bearish position, otherwise hold.<\/p>\n

Commentary<\/strong>
\nT2108 closed at 25% and hit the middle of the latest forecast for T2108 to drop between 20-30%. I now expect T2108 to soon enter oversold territory (20% or below). Moreover, this visit to oversold territory should prove almost as gut-wrenching as the last cycle. As a reminder, the S&P 500’s close below the 50DMA (on Monday, Nov 21) invalidated my previous bullish forecast for the S&P 500 to establish a higher trading range after working off overbought conditions. In fact, the current sharp plunge from overbought conditions resembles past drops from overbought conditions this year – a lesson to remember for 2012.<\/p>\n

The overall technical condition of the S&P 500 continues to deteriorate at a rapid clip. The current pattern on the S&P 500 is now very similar to the slide from late July to August: the slide along the lower-BB is now confirmed. This development is ominous and warns us that a retest of the 52-week lows has a high probability.<\/p>\n


\n
\"The<\/a>
The S&P 500 is now sliding rapidly down the lower-BB<\/figcaption><\/figure>
\n<\/center><\/p>\n

Supporting the bearish outlook is a breakout of SDS, the ProShares Ultrashort S&P 500, above its 50DMA. <\/p>\n


\n
\"Another<\/a>
Another ominous sign: SDS breaks out again<\/figcaption><\/figure>
\n<\/center><\/p>\n

Here is a summary of potential scenarios and how I will be trading them:<\/p>\n