(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 occasionally posted on twitter using the #120trade hashtag. T2107 measures the percentage of stocks trading above their respective 200DMAs)
T2108 Status: 49.9%
T2107 Status: 32.7%
VIX Status: 15.5
General (Short-term) Trading Call: neutral (just switched from bearish)
Active T2108 periods: Day #35 over 20%, Day #34 over 30%, Day #5 over 40% (overperiod), Day #7 below 50%, Day #9 under 60%, Day #349 under 70%
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).
IBB (iShares Nasdaq Biotechnology).
Commentary
Going into the August Angst, I frequently pointed out what I thought of as a dangerous narrowing of market performance. I have finally stumbled across some stark quantification of the sharp divergence of performance between the top stocks and the rest of the S&P 500. Money manager Whitney Tilson found the following on November 20, 2015:
“…the 10 largest stocks (by market cap) in the S&P 500 are up 13.9%, while the other 490 are down 5.8%. This 19.7% spread is the largest in 15 years and has only been larger twice (in 1998 & 1999, at the peak of the internet bubble)…
The 10 largest stocks are (in order): Apple, Google (both classes of shares), Microsoft, Exxon Mobil, GE, J&J, Wells Fargo, Berkshire Hathaway, Amazon and JPMorgan Chase (the numbers would be even more skewed if the #11 stock, Facebook, were included, as it’s up 38% YTD).”
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