Month: August 2015

The Worden T2108 indicator measures the percentage of all   NYSE stocks that closed above their simple 40 day moving average. When T2108 falls below 10% it is a sign that the market will bounce from a very oversold level. The T2108 was at 6 on Tuesday and at 10 at Wednesday’s close. There have only been a few times T2108 has gone to single digits in the pas 28 years since Worden started tracking it. Here is a monthly chart of T2108 since 2007. In 2008 T2108 got as low as 1.2.   In the 2011 decline it reached 6.5.   In the 1987 rout it reached its lowest ever, 0.5. One should not start selling when T2108 is below 10.

I am 100% in cash.   Market did better on Tuesday than is apparent from averages. Only 337 new lows, down from 1465 on Monday. There were 40% gainers versus 7% on Monday.   With T2108 at 6%, the market is very oversold. Guppy chart of SPY is not yet BWR, but RWB pattern is clearly over. Red arrows show month of May and that Sell in May worked like a charm this year. Thus far, the current decline looks quite small.

With T2108 in single digits and the futures strong, I am tempted to nibble a little at QQQ or SPY. I have said many times that I should buy when T2108 is in single digits and everyone is scared….

The T2108 has fallen to single digits. I have always found that I should have held my breath and bought anytime it has fallen below 10%. While on vacation last week I went 95% to cash in all trading accounts. I will wait for the dust to settle to determine my future moves. My short term QQQ trend indicator is in the 9th day of a down-trend. Maybe I was too quick to stop posting that indicator. It had whipsawed so many times recently. I estimate that the   GMI would have flashed a Sell signal last Thursday or Friday.

IN SPITE OF ALL OF THE PROGNOSTICATIONS OF THE CNBC PUNDITS, NO ONE KNOWS HOW OR WHEN THIS DECLINE WILL END.   WE MUST BE CAREFUL AND PROTECT OUR MONEY.