Luna $ Ticks

August 19, 2008

Mixed Signals

Filed under: Trading SPX SPY — moontrader @ 5:45 pm

Although I would feel more comfortable in shorting if I had seen SPX reaching 1325, there are mixed signals that a short term top is in place. In a previous post, I showed this chart:

The top of 05/06/08 produced indeed a short term top of a relative significance in the F5 series (42 days).

Here’s the updated chart, with an extra bottom/bottom correlation added (the orange one, pointing to 07/15 year bottom) (notice how accurate the tops can be projected from past ones):

MACD and Stochastics are both giving sell signals, but they’re still in positive territory. Today we also traded the whole day below the trendline that I showed yesterday, as well as below Daily DMA 3×3 (blue) and Daily DMA 7×5 (green). However, we still haven’t pierced the Daily DMA 25×5 (brown), which is the most important one and holds trends fairly well:

Timing is very important, and I prefer to wait for a clear confirmation of a trend reversal instead of trying to catch the extremes of a movement. For me, the confirmation would be SPY/SPX closing below the Daily DMA 25×5 (brown).

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2 Comments »

  1. If it doesn’t break the 25 dma, would you expect it to reach 1325?

    Comment by Jigsaw — August 20, 2008 @ 7:02 am | Reply

  2. Yes. As far as it doesn’t break the 25×5 DMA, I would expect a rally today. There are many support levels converging just below yesterday’s low.

    Comment by moontrader — August 20, 2008 @ 7:35 am | Reply


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