Luna $ Ticks

August 12, 2008

Short Term Top

Filed under: Trading SPX SPY — moontrader @ 5:08 pm

In my previous posts, I’ve insisted that SPY would get to 132.55, but today’s drop is a little worrying. My analysis is largely based on time cycles and yesterday’s top (08/11 @ 131.51) followed by a large sell off makes me believe that a short term top is in place.

In terms of time cycles, here’s corresponding tops and bottoms:

If yesterday’s top is a significant one, then we would be facing a short term trend reversal, which would then be in agreement with the longer term downtrend, as I showed in a previous post using weekly and monthly charts. Notice in the chart above, how powerful is the top corresponding to that of yesterday, marked with the doted line.

MACD and Stochastics are still positive in the daily chart, but the Fibonacci proportions since 07/15 bottom also make for a short term top: prices fell sharply as they reached the 131.51 level: 

We might still go above 131.55, but the odds are shrinking considering the many bad news that we’ve been having recently. The rally would have to start tomorrow and go into Thursday.

Needless to show that we’re still above the 3 Daily DMA’s, so there’s still no confirmation of a change in the short term trend. However, failing to rally in the next couples of days would probably send prices back down, close to 120.

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3 Comments »

  1. Have to admit, it would be a little disappointing not to see it touch the 132.50 area but who can predict the markets perfectly, I’ll wait it out for awhile. The banking stocks look to be rolling over again, tempted to buy some BAC puts here

    Comment by Jigsaw — August 12, 2008 @ 9:53 pm | Reply

  2. It might get there in the next days. I’m already short and starting to feel that I jumped the gun. I’m not gonna mess around my position, but I’ll definitely get some more puts if it does touch that number until Friday. I might have not only a target for the fall, but also a probable date. Let’s see how things unfold.

    Comment by moontrader — August 12, 2008 @ 10:45 pm | Reply

  3. With today’s opening, I find it difficult to go above 131.51 in the next days.

    Comment by moontrader — August 13, 2008 @ 12:46 pm | Reply


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