Above The 40 – An Unenthusiastic Rebound For The Stock Market From Stretched Conditions

Impinj (PI) exploded higher after filing its 10Q, but it took follow-through buying to finish erasing the loss from the July high.

Impinj (PI) exploded higher after filing its 10Q, but it took follow-through buying to finish erasing the loss from the July high.

Snap 
My bad on SNAP. It is that simple. I made a play for SNAP on what I thought was a bottoming process; the bottom has now fallen out. Even selling calls against the position could not compensate for the current collapse. With SNAP in single digits, the stock enters the danger zone of pressure. I still think SNAP will eventually figure out how to effectively monetize its audience, but there could also be a race against time with social media under increasing scrutiny. Indeed, some pairs trades in this sector make sense. (I am really feeling the irony now of starting out as a strong bear on SNAP.)

Snap (SNAP) accelerated to the downside this month, making repeated all-time lows.

Snap (SNAP) accelerated to the downside this month, making repeated all-time lows.

Tesla (TSLA)
I am glad I decided not to dump my shares into the panic. I sold into the bounce the next day around $280. I am impressed the stock was able to keep pushing higher even with the IPO of Chinese electric car maker Nio Limited (NIO). Still, my interest in the bullish case for TSLA is over for now; any trades going forward will be strictly short-term. Another test of 50/200 DMA resistance is in play.

Tesla (TSLA) printed an impressive abandoned baby bottom on high volume. Buyers followed through right through the NIO IPO.

Tesla (TSLA) printed an impressive abandoned baby bottom on high volume. Buyers followed through right through the NIO IPO.

“Above the 40” uses the percentage of stocks trading above their respective 40-day moving averages (DMAs) to assess the technical health of the stock market and to identify extremes in market sentiment that are likely to reverse. Abbreviated as AT40, Above the 40 is an alternative label for “T2108” which was created by Worden. Learn more about T2108 on my T2108 Resource Page. AT200, or T2107, measures the percentage of stocks trading above their respective 200DMAs.

Active AT40 (T2108) periods: Day #144 over 20%, Day #113 over 30%, Day #108 over 40%, Day #5 over 50% (overperiod), Day #11 under 60%, Day #64 under 70%

Daily AT40 (T2108)

Black line: AT40 (T2108) (% measured on the right)
Red line: Overbought threshold (70%); Blue line: Oversold threshold (20%)

Weekly AT40 (T2108)

Weekly T2108

All charts created using freestockcharts.com unless otherwise stated

The charts above are my LATEST updates independent of the date of this given AT40 post. For my latest AT40 post click here.

AT40 = 51.6% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 54.6% of stocks are trading above their respective 200DMAs
VIX = 12.1
Short-term Trading Call: cautiously bullish

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Disclosure:Full disclosure: long BHP calls, long RIO puts, long UVXY calls, short FB, long INTC calls, long MU shares and calls, long SNAP 

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