T2108 Update – Commodity Currencies Leading The Way To Overbought Trading Conditions

(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: 65.4% (near 6-month high)
T2107 Status: 29.1%
VIX Status: 17.1
General (Short-term) Trading Call: Neutral (target of 1996 on the S&P 500 has already occurred ahead of overbought conditions. See “From the Edge of A Breakout to the Ledge of A Breakdown” for more details).
Active T2108 periods: Day #6 over 20%, Day #5 over 30%, Day #5 over 40%, Day #3 over 50%, Day #2 over 60%, Day #320 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).

It was a close call. T2108 gained for the 9th straight trading day. My favorite technical indicator got as high as 67.6%, still short of overbought conditions. The S&P 500 (SPY) also closed with a very marginal gain, essentially flat. The index remains comfortably above its 50DMA. With the upper-Bollinger Bands (BBs) opening upward, a run-up to 200DMA resistance sometime in the coming weeks looks all the more likely. Still, I decided to lock in profits on my last play on the S&P 500 (SPY): shares in ProShares Ultra S&P500 (SSO).


The S&P 500 (SPY) is maintaining a V-like bounce from oversold conditions

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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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