T2108 Update – Full Bull (FB) Part Two

(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: 39.9%
T2107 Status: 19.2%
VIX Status: 22.3
General (Short-term) Trading Call: bullish
Active T2108 periods: Day #3 over 20%, Day #2 over 30% (overperiod), Day #47 under 40%, Day #51 below 50%, Day #66 under 60%, Day #407 under 70%

Commentary
On January 28, 2016, Facebook (FB) gained 15.5% in a post-earnings move that I described as “full bull.” The bullishness of the day was confirmed when T2108 finally exited an excruciating oversold period the following day. I am calling this day: “Full Bull (FB) Part Two” because FB has recovered from a near complete reversal of all its post-earnings gain to close above its 50-day moving average. This bullish move comes after six straight trading days testing and retesting resistance at the 50DMA only to get turned back.

This close-up of Facebook (FB) shows how the stock almost gave up its entire monster post-earnings gain and then struggled mightily to fight 50DMA resistance. The close above resistance positions FB to make a fresh run to regain its post-earnings luster.

The road ahead to confirm FB’s bullish move will not (should not?) be nearly as easy as Full Bull Part One. On the positive side, T2108 soared for a third straight day demonstrating broad participation in this current bounce from oversold trading conditions. At 39.9%, T2108 closed exactly at the peak of December’s bounce from oversold conditions.