T2108 Update – Broken Record: Chopfest Continues

T2108 Status: 56.9%
T2107 Status: 56.0%
VIX Status: 13.4
General (Short-term) Trading Call: Neutral.
Active T2108 periods: Day #136 over 20%, Day #95 above 30%, Day #39 above 40% (overperiod), Day #1 under 50% (underperiod), Day #5 under 60%, Day #205 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).

I have almost felt like a broken record since November/December whenever I note that the S&P 500 (SPY) is trading in a chopfest. Yet, “chopfest” is exactly the perfect description for this trading action even as the index steadily creeps higher along its 50DMA support.


The S&P 500 has gone almost nowhere since the chopfest began in November – yet the uptrend from the 50DMA has lasted the entire time

During this chopfest, volatility has made some big moves. However, for almost three months, volatility has remained relatively mute. It is very easy to get lulled asleep here, but I would say volatility is becoming a coiled spring at this point.

Is the VIX coiling for another jump higher?

Although the S&P 500’s 1.2% decline just reversed Friday’s one-day surge, T2108 has moved to a fresh 5-week low. At 44.6%, I find myself thinking about oversold conditions again…and I know NOT to get too excited. Yet, the extended decline of T2108 relative to the S&P 500 has me wondering whether a bigger breakdown is finally around the corner. I have not yet acted on this suspicion.

The 50DMA has also acted as support and a magnet for the NASDAQ (QQQ). The trading has been better-behaved than on the S&P 500.

The NASDAQ is also following along its 50DMA

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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