Luna $ Ticks

August 25, 2008

Flirting With Disaster

Filed under: Trading SPX SPY — moontrader @ 5:07 pm

I said before that we would need a close below DMA 25×5 to negate the short-term uptrend. Here’s where SPY ended up the day:

Although SPY closed exactly at the DMA 25×5 level I mentioned in my previous post, 127.02, the fact that this line was revisited for the third time in less than a week means weakness. I’ll repeat that in the case we have a close below that line and MACD goes into negative territory, the short-term uptrend scenario will be invalidated and we might head sharply lower. On the other hand, it’s important also to notice that volume today wasn’t much different from last Friday. Considering the extent of the drop, I’d say that volume was extremely low.

I wasn’t expecting such a drop today, but the scenario of new short-term highs until next week is still valid. Just to remind you, the set of criteria I’m using for a short-term uptrend is very simple and it is:

  • Daily closes above DMA 25×5
  • MACD in positive territory

I would short only when both criteria are met.



  1. I think your arguement and trading criteria are very sound.

    Comment by T.B.A. — August 25, 2008 @ 5:29 pm | Reply

  2. what a wonderful and clear chart.

    Comment by lady bug — August 25, 2008 @ 10:34 pm | Reply

  3. If we can close up tomoorow the lower trend line that was breached last week could still be resistance close to a new high by 9/2. Or at least perhaps a small double top. With this low volume I don’t trust even taking a small position yet, we could be ripe for a short squeeze as well.

    Comment by Jigsaw — August 25, 2008 @ 11:13 pm | Reply

  4. Jigsaw, I totally agree with you. As much tempting as it might be shorting right away, I’m sticking to this simple set of criteria before taking any action. Medium and Long term the trend is down.

    Comment by moontrader — August 26, 2008 @ 10:58 am | Reply

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