T2108 Status: 59.9%
T2107 Status: 27.8%
VIX Status: 17.7 (small bounce off 200DMA)
General (Short-term) Trading Call: Neutral (target of 1996 on the S&P 500 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 #8 over 20%, Day #7 over 30%, Day #7 over 40%, Day #5 over 50% (overperiod), Day #1 under 60% (ending 3 days over 60%), Day #322 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
322 trading days and counting since T2108 last traded in overbought conditions. I thought THIS would be the week for finally bringing the streak to an end, but T2108 took a sharp detour today.
Like a forcefield, overbought conditions once again defy a breakthrough by T2108
In parallel, the S&P 500 (SPY) lost a fraction of a percent as the index turned its back on the recent 50DMA breakout.
The S&P 500 (SPY) may have stalled out for now
The small loss on the day helped the volatility index, the VIX, finally end its 10-day losing streak. The VIX jumped 9.3% with a bounce off its 200DMA.
The angst of August has become a distant memory. The drama with Glencore helped spark a very brief revival of angst.
The big rally in the Australian dollar came to a screeching halt. As I have indicated before, I am VERY skeptical about the sustainability of this rally.
The Australian dollar printed a higher low against the Japanese yen as Glencore collapsed on September 29, 2015
Earnings season has begun so, as always during this time, I am staying away from overplaying my hand with the technical calls. However, I think it is very surprising that the volatility index declined so steadily going into earnings season. This decline sets up the potential for some very disruptive moves if any major company delivers particularly bad news. So with T2108 scraping at overbought levels, a volatility index hovering above the 15.35 pivot, and a market taking a suddenly calm outlook on earnings, I am definitely avoiding any major bullish bets. (Trading call is still neutral).
