T2108 Status: 69.0% (ending 3 days in overbought conditions)
VIX Status: 11.6
General (Short-term) Trading Call: Hold
Active T2108 periods: Day #234 over 20%, Day #86 over 40%, Day #13 over 60% (overperiod), Day #1 under 70% (underperiod)
Commentary
Last week, I recommended that both bears and bulls brace themselves for this summer’s trading. So of course the overbought period that triggered my warning ends in just three days (just under the median duration of 4 days) with a notable whimper.
The S&P 500 has no sign of topping and even sits firmly within its primary uptrend defined by the first and second Bollinger® Bands (BBs). For trend followers, this is a spot for buying.
The S&P 500 takes a short rest.
The volatility index, the VIX, is off its post-recession lows. The bounce is fairly unspirited.
A lazy drift higher for the VIX.
The Australian dollar weakened ever so slightly. This confirmed general market weakness, but the currency is hardly breaking down.
Like the S&P 500, the Australian dollar versus the Japanese yen
(AUD/JPY) still sits comfortably in its upward trend.
These signals all add up to intrigue but no rush to act. Bears do not have enough weakness here to justify a trade, or at least one with a good risk/reward. Bulls can swing trade on the uptrend; short-term expectations should be muted.
While we wait for some firmer resolution, here is an interesting chart of Skullcandy (NASDAQ:SKUL). Yesterday it marginally broke above its 50-day moving average (DMA) and stayed faithful to its 200DMA support.
I have covered this company and its prospects in several posts. Slowly but surely the healing progresses.
Daily T2108 vs the S&P 500
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%).
Weekly T2108
Be careful out there!
Full Disclosure: Long SKUL.