50DMA Retests Successfully On Shutdown Eve
Dr. Duru | Oct 01, 2013 03:14AM ET
T2108 Status: 59.1%
VIX Status: 16.6 (up 7.4%)
General (Short-term) Trading Call: Hold
Active T2108 periods: Day #65 over 20% (overperiod), Day #1 under 60%, Day #90 under 70%
Commentary
I know it sounds like crazy talk on the eve of a shutdown o the U.S. Federal government, but this STILL looks like a market that wants to go up. The S&P 500 (SPY) gapped down and quickly slid under its 50DMA. Led by tech stocks that immediately zipped to fill gaps, the S&P 500 managed to rally just enough to close above its 50DMA. Voila – a 50DMA retest successful so far in the wake of buyers who clearly still are barely concerned with the troubles in Washington DC. All we need to see is follow-through buying. Could the start of the month deliver the gifts that keep giving?
Adding to my sense of a market that wants higher is 1) a loss on the day under 1%, 2) a T2108 that barely trickled downward, and 3) all despite a VIX that soared again. This pop took the VIX well above the pivot.
Under the circumstances and without knowing anything else, I would have guessed this VIX pop accompanied a -2% or so day. Instead, we have a market that remains relatively resilient. October is shaping up to be an “interesting” month – I just wish T2108 would drop to oversold conditions…
Black line: T2108 (measured on the right); Green line: S&P 500 (for comparative purposes)
Red line: T2108 Overbought (70%); Blue line: T2108 Oversold (20%)
Be careful out there!
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Full disclosure: long EEM strangle (out-of-money calls and puts), long VXX
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