T2108 Status: 28.0%
T2107 Status: 34.8% (a 9-month low!)
VIX Status: 13.7 (8.7% gain)
General (Short-term) Trading Call: Neutral
Active T2108 periods: Day #190 over 20% (overperiod), Day #1 under 30%, Day #5 under 40%, Day #45 under 50%, Day #62 under 60%, Day #261 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).

Commentary
The market continues to follow through on the bearish divergence I pointed out at the beginning of last week. The lags have finally caught up with the S&P 500 (SPY) with a clean breakdown from its 50-day moving average (DMA) on Friday.

The S&P 500 breaks down below its 50DMA and appears headed for a quick retest of 200DMA support

The S&P 500 already appears headed for another retest of its 200DMA. I did not expect a return of selling pressure so soon. The Guggenheim S&P 500 Equal Weight ETF (RSP) is further emphasizing the bearish developments. RSP has already broken down below its 200DMA and seems very likely to break the low from early this month. Such a development would confirm a BEARISH downtrend from the recent highs for RSP.

Guggenheim S&P 500 Equal Weight ETF (RSP) continues an ever more ominous-looking breakdown

The “good news” is that the next 200DMA retest for the S&P 500 SHOULD come with true oversold conditions: T2108 below 20%. If so, I will feel more comfortable getting aggressive on the next cycle of buying; that is, not just fading volatility but also buying call options on ProShares Ultra S&P500 (SSO). The increasingly bearish action on RSP will likely make me even quicker to take profits than in the last cycle.