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T2108 Time

By Michael on Oct 12, 2005 in Chart Reading

Worden’s trusty T2108 indicator (% of NYSE stocks above their 40-day moving averages) dropped 23.71% today and closed below 20. As I’ve pointed out several times before when it reaches 20 the market’s seriously oversold. When I pointed out the break of 20 back in March the market quickly bounced, pushing T2108 up to 36. But a week later the market had fallen again dragging T2108 all the way down to 14. That marked the bottom for the spring. So my point, like I said back in March is that T2108 never spends much time below 20. I’m not saying that tomorrow will be the bottom… but I think some kind of bounce is near. And I certainly wouldn’t be initiating shorts here unless I was expecting armageddon.