T2108 Status: 24.1%
T2107 Status: 23.8%
VIX Status: 20.7 (elevated)
General (Short-term) Trading Call: bullish – see below for caveats
Active T2108 periods: Day #13 over 20%, Day #1 under 30% (ending 6 days over 30%) (underperiod), Day #17 under 40%, Day #21 below 50%, Day #36 under 60%, Day #377 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
So much for the S&P 500 (SPY) showing signs of firming! In my last T2108 Update, I viewed the last positive days of the Santa Claus rally with great favor because of the breakout above resistance at the 50 and 200-day moving averages (DMAs). T2108, the percentage of stocks trading above their respective 40DMAs, also looked very strong. At least I pointed out that the volatility index, the VIX, had not yet provided its “all clear.” Most importantly, I included this caveat: “For bullish confirmation, I am looking for the S&P 500 to print a strong close above the downtrend line pointed out above. I am still getting over my surprise that the index managed to close so strongly above combined resistance at the 50 and 200DMAs.” Sure enough, the S&P 500 failed to provide that confirmation: that short-term downtrend remains firmly in place…
The S&P 500 (SPY) caps a third sell-off day with a (slightly) encouraging bounce off its lows…avoiding a near 3-month low.
…moreover, the 50 and 200DMAs once again look like firm resistance. The Santa Claus rally ended with a whimper and a much more modest gain of 1.1% thanks to two days of low-volume selling to close the year. That selling carried into 2016 on very strong volume. The selling was strong enough to send T2108 into oversold territory for just under 30 minutes.
