Luna $ Ticks

August 13, 2008

Back on Track to SPY 132.55

Filed under: Trading SPX SPY — moontrader @ 10:48 pm

Yes, we definitely are, and we’ll be there soon. Although I got SPY puts on Monday, I was feeling frustrated and not less worried because the index was starting to fall without reaching a target which would make a perfect proportion to the downside. For me, this could only mean two things: we either are in the beginning of a bull market or we had a failed rally. However, neither one make sense. The beginning of a bull market usually doesn’t have a sinuous way up: it goes straight up, corrects, then resumes the climbing. The second alternative makes even less sense: a failed rally is usually followed by a massive sell-off, which didn’t occur. In terms of proportions, you usually find a perfect one if you really dig into it, which I was doing today and I just couldn’t find a zone where resistance and target agree on 131.55. Believe me, I had a profitable position today but I wasn’t happy with it.

Towards the end of the day, however, I had that “Eureka” moment: an insight into the current scenario.

First of all, as I mentioned before, the way to 132.55 would be sinuous and tricky: a wash-and-rinse for both bulls and bears. The fact that I was fooled into believing that this wave up was done last Monday makes this scenario even more valid. SPY is going up in 3-waves way, which means it’s correcting to the upside to then resume the downtrend. Retracements, however, have been deeper than 61.8%, triggering stops for the faint of heart.

Here’s what happened today:

Notice how the reaction came just on top of the convergence between the 38.2% retracement level with the support line. Second, as important, is the fact that SPY closed above the Daily DMA 3×3. And third, the magical math for the last leg up:

131.55 (top of last Monday) – 126.38 (bottom of 08/08) = 5.13

Today’s bottom = 127.67

Therefore: 127.67 + 5.13 = 132.80

That’s close enough to the 132.55 objective/resistance I have been talking about. There we go, back on track!

And here’s the new proportions in time, which make even more sense than before:

We should be getting there, 132.55, between Monday and Tuesday next week (maybe we’ll retest the 131.55 level by Friday). If a major drop will unfold, it will start as soon as we get to our target, and it’s style should be “shock and awe.”

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3 Comments »

  1. I agree that it will be a “shock and awe” drop. Once it breaks the lower trend line, you’ll see people heading to the exits in a hurry. Looking forward to seeing how it plays out.

    Comment by Jigsaw — August 14, 2008 @ 12:16 am | Reply

  2. Moontrader

    I have been following your comments on TK’s comments section for some time. (I dont post I’m happy to be a shadow watcher) I too trade cycles using fibs into the future, square of nine cycles and square of 12 as well as solar, lunar and planetary cycles forward into time. One of the most underconsidered factors IMO is the lack of many traders considering the price time relationship. I am very interested in the charts above and would appreciate it if you could point me in the direction of further study regarding this. I think you get my email through the comments so don’t hesitate to drop me a line. Thank you for you time. Whitto

    Comment by Whitto — August 14, 2008 @ 5:26 pm | Reply

  3. your DOH

    Comment by Whitto — August 14, 2008 @ 5:27 pm | Reply


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