T2108 Update – Market Momentum Waning

(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: 55.3%
T2107 Status: 30.9%
VIX Status: 16.5
General (Short-term) Trading Call: slightly bearish
Active T2108 periods: Day #27 over 20%, Day #26 over 30%, Day #26 over 40%, Day #24 over 50% (overperiod), Day #1 under 60% (ending 8 days over 60%) (underperiod), Day #341 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
I made the case in the last T2108 Update for a bearish turn in the stock market. On Monday, November 9, 2015, we started a confirmation process for that change in outlook. T2108 closed out the day at 55.3% and is retesting the low point of what has become a month-long range. A breakdown serves as a bearish confirmation. If T2108 bounces again from here, I will back down a bit on my bearish trading call.

T2108 looks ready to break down.

The S&P 500 (SPY) is also facing its own important retest of support. The index fell almost 1%, got back in sync with T2108, dropped out of the primary uptrend channel, and came within a “hair” of retesting 200DMA support.