So I was looking through my charts today and was shocked when I got to T2108 (Worden’s indicator for % of NYSE stocks above their 40-day moving averages). While the indices have been steadily hitting new highs (notably excluding the Russell 2000 and financials) T2108 has been trending down. In other words, a greater percentage of NYSE stocks were slipping below their 40-day moving average as the indices were climbing to new highs. Bulls might choose to call that a stock picker’s market. Others, like me, refer to it as unhealthy.
Here are charts of T2108 and the NYSE Composite Index:
Aside from the glaring negative divergence in T2108 what really struck me about T2108′s chart is that it’s already below its *magical* 20. As I’ve posted many times before, 20 on T2108 is typically a sign a of a decent bottom and a buy signal. Usually T2108 hits 20 after an ugly slide and the indices are at multi-month lows. This time we’re just off of fresh multi-year and all-time highs on many indices. My gut tells me that there’s still a lot of air under the indices but T2108 indicates that we’re near a bottom. Interesting times…
Note: Non-Worden subscribers may want to look at similar indicators at StockCharts.com, like $SPXA50R, $NYA50R and $NAA50R.
Sure, NOW you alert us to the divergence! :-w
I haven’t looked at T2108 (or its cousin T2107)in a very long time. You just reminded us of the importance!
I also hadn’t looked at it in a long time. But I whined about the weak upside/strong downside volume for weeks.
Buy now? You first. :d
Is this going to be a record volume day? (SPY) is over 303,000,000. I don’t have all my historical data available, but I think that’s record volume on the (SPY).
Holy smokes…my short portfolio is in 7th heaven and my long portfolio was knocked out early. Woof. $TRIN just shot to the moon and back in the past 10 minutes. Someone hit the “big red” button.
~o)
yeah man, it’s fugly out there. Brokers look like death
you buy financials when blood is on the street and cash flow matters. cant believe people held on to those pigs this long.
i love when you post this stuff. took down some smh calls at $38 tick.
you generally rally or crash from these type of readings. betting on a crash is fun but rather bet on the bounce
I’m with you Howard. [-o<
T2108 reading of 20 or below usually at least leads to a bounce of some type. T2107 still has more room on the downside before it gets below 30 which usually indicates a longer term bottom.
Hey Mike,
I posted on T2108 a couple of nights ago noting the same thing. I think the rotation into large caps has held the NDX and Dow up, while the broader markets (especially mid and small caps) were slipping into a correction. Hence the divergence with the Indices. Either way, I totally agree that it is unhealthy, although probably a sign of a bounce coming.
Joey
Interesting indeed…
I’m choosing to watch…
Mike, how do I get a plot of T2108 from Bloomberg? Thanks, Pat.
Pat,
I don’t know, I’ve never used a Bloomberg terminal.