I’ve always been fond of the T2108 indicator that Worden Charts provides. Essentially what it is, is an indicator that shows the percentage of stocks trading above their 40-day moving average. To me, it is a great barometer on the overall health of the market and the collective attitude of stocks in general. 

I mention it daily in my trading plan that I post each morning prior to the market opening. But I wanted to use this post to focus entirely on the T2108 as there is a very glaring bullish divergence emerging on the chart. Does that mean the market must go right back up? Absolutely not. Instead what I think it might be showing is that the market is still range bound and the weakness we saw in December isn’t likely to be the start of a massive bear market.

If I am right in thinking this, that means that we are going to have to be more nimble and more aggressive with the profit taking on the trades that are made. 

The triangle pattern that has formed over the last five months suggests, further suggests that this market is range bound market that will have its share of ups and downs going forward. 

T2108 divergence

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