Luna $ Ticks

September 7, 2008

Dear Cousins Fannie and Freddie

Filed under: Trading SPX SPY — moontrader @ 5:09 pm

It was about time for you two guys to be bailed out by Uncle Sam. Good news for some, bad ones for others. But it has nothing to do with being bullish or bearish: the market will keep its course no matter what. Facts and expectations make the markets swing back and forth in natural movements of advances and corrections. And that’s exactly what we’ll be witnessing on Monday and maybe in the following couple of trading sessions: a correction in the form of a bear market rally. I said bear market because, as I stated before, we are now in a downtrend until proven otherwise. This is what I mean:

We’re well below the 3 DMA’s, Stochastics is down and – most important – MACD just got into negative territory suggesting a long road ahead to the south.

Now, a word and a chart on date proportions. The other day I talked about a top on or around September 2nd, and we indeed had a top exactly that day which turned out to be extremely significant. I also talked about the market cloning itself especially around reversal points. This what I meant:

Notice that the top on May 19th corresponds exactly (0 days error) to the top on September 2nd, while the bottom on May 23rd corresponds to the bottom on September 5th (September 6th less one day). This suggests that a short-short-term bottom is in place and we should see a non-significant rally in the next couple of trading sessions – Fannie and Freddie bailout will provide the market with the fundaments and excitement for this move up. As far as MACD keeps pointing down and prices stay below DMA 25×5, this rally can be seen as an opportunity to short – always exercising caution and never putting all your chips on the table. DMA 3×3 can be a good reference for entry points, but always with a clear stoploss, whatever that is.

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2 Comments »

  1. Can you suggest a web site where I can monitor the DMA3X3. Your chart shows it closed at 128.99 but with a potential rally for the next few days, I take it the DMA3X3 will be going up.

    Comment by Adam — September 7, 2008 @ 10:30 pm | Reply

  2. Looking to see how tech issues due today as well. If this sector shows weakness into the broader index rally, shorting looks more promissing.

    Comment by Jigsaw — September 8, 2008 @ 5:03 am | Reply


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