(T2108 measures the percentage of stocks trading above their respective 40-day moving averages [DMAs]. It helps to identify extremes in market sentiment that are likely to reverse. To learn more about it, see my T2108 Resource Page. You can follow real-time T2108 commentary on twitter using the #T2108 hashtag. T2108-related trades and other trades are sometimes posted on twitter using the #120trade hashtag. T2107 measures the percentage of stocks trading above their respective 200DMAs)

T2108 Status: 62.8%
T2107 Status: 51.2%
VIX Status: 14.0
General (Short-term) Trading Call: Hold (bullish positions)
Active T2108 periods: Day #23 over 20%, Day #21 over 30%, Day #18 over 40%, Day #16 over 50%, Day #11 over 60% (overperiod), Day #93 under 70% (underperiod)

Reference Charts (click for view of last 6 months from Stockcharts.com):
S&P 500 or SPY
SDS (ProShares UltraShort S&P500)
U.S. Dollar Index (volatility index)
EEM (iShares MSCI Emerging Markets)
VIX (volatility index)
VXX (iPath S&P 500 VIX Short-Term Futures ETN)
EWG (iShares MSCI Germany Index Fund)
CAT (Caterpillar).

Commentary
Watching T2108 has become similar to watching the grass grow while paint dries. Today T2108 closed slightly down at 62.8% and is now on an 11th day levitating above 60% without hitting overbought levels. The S&P 500 (SPY) declined fractionally with a 0.15% loss as buyers convincingly picked the index off its lows for the day.

The S&P 500 is still poised to follow-through on its latest breakout to new highs

There is not a lot to say about T2108 until this consolidation period ends with a breakdown or breakout. I mainly posted today to showcase two charts of interest: Alibaba (BABA) and Netflix (NFLX).

Ironically enough, the “Ali Rah Rah Pop” is leaving behind Alibaba (BABA). The market hype around China’s Singles Day seems to have exhausted buying power for the moment. BABA has declined 5 out of 7 days since then even as the S&P 500 has continued to creep higher. Now, BABA has neatly retested its strong uptrend defined by the 20-day moving average (DMA). I am betting this support will hold. However, there is no need to play “hero” on a stock like this. I will not buy until the buying power shows up again in the stock. A great signal for that possibility is a trade above today’s intraday high of $110.68. A natural stop from this position would be today’s intraday low essentially at the 20DMA at $107.08. Such a break would immediately put the $100 level and a complete post-earnings reversal into play.

Print Friendly, PDF & Email

Related Posts