: 65.3% (first day of a new overbought period)
VIX Status: 19
General (Short-term) Trading Call: Hold.
Commentary
T2108 fell out of overbought territory after a 3-day stint. Unlike the previous two overbought trips, this one did not provide a perfect opportunity to fade from resistance. On the other hand, the end of the overbought period did not bring the S&P 500 to natural support.
The first firm support should be just a few points away around 1369, the 2011 high. I will look to dump my latest round of SSO puts around there, and hopefully for near breakeven.
So, for now, little has changed in the bullish outlook. The persistent grinding upward, the higher highs and higher lows, the continued push into overbought territory all continue to display the relative strength of the buyers.
In case you think the eurozone sovereign debt crisis remains a clear and present danger to the U.S. stock market, I present this weekly chart as a reminder that the S&P 500 in general is printing higher highs and higher lows after each episode of europanic. 
I did take the opportunity to unload my shares in Siemens (SI) (my europanic contrarian play). It is at the top of its trading range, and I did not feel comfortable holding it through the Federal Reserve latest announcement on monetary policy.
Finally, Caterpillar (CAT) has moved from a promising breakout above its 50DMA to a disappointing return to its pre-earnings closing price. I was looking to CAT as the final piece in the puzzle of starting an extended overbought rally. Back to the drawing board for now!
Daily T2108 vs the S&P 500
Click chart for extended view with S&P 500 fully scaled vertically (updated at least once a week)
Full disclosure: long SDS; long SSO puts; long CAT
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Overbought Period Ends As Breakout Wavers
Published 08/02/2012, 02:39 AM
Updated 07/09/2023, 06:31 AM
Overbought Period Ends As Breakout Wavers
T2108 Status
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