Luna $ Ticks

September 11, 2008

Today I saw a rally

Filed under: Trading SPX SPY — moontrader @ 3:44 pm

Today the market opened very weak but, in a seesaw trading session, it managed to finish with a sharp rally starting in the very last minutes of the day and going into after-hours trading.

First of all, the last couple of trading days have been choppy, incredibly volatile, SPY bouncing back and forth between extremes, in terms of both price and sentiment. It’s important in this moment not to be taken by irrationality and focus in our strategy, with a good set of criteria. Although we had a close above DMA 3×3 – which is totally normal in the beginning of a trend – our scenario is still intact and there’s no sign yet of a trend reversal:

I have to say I’m not comfortable with today’s rally, especially because of the volume, but I absolutely wouldn’t change my outlook. However, tomorrow will be a key day to our scenario. 4 out of the last 6 trading sessions were positive, yet the market fell from 09/03, PLUS Stochastics and MACD are still negative. Meaning, lower lows and lower highs on average, i.e., a downtrend. For the faint of the heart, I recommend a stoploss at SPY 126.7, right above what was a strong support before 09/03 (126.4). So, if tomorrow we have another positive day, then I’ll have to reassess the situation to understand where we are heading. On the other hand, if tomorrow we have a negative day, can you imagine where we could be heading with all the buying volume reverting into the market?



  1. Tim Bost expects SPX 1163 by Wedensday

    Comment by Fork_Master_Serg — September 11, 2008 @ 7:47 pm | Reply

  2. Where is your DPO?

    Comment by Fork_Master_Serg — September 11, 2008 @ 11:23 pm | Reply

  3. Hey Serg,

    I didn’t include the DPO today because it’s far from oversold/overbought. If you have Thinkorswim platform, you can easily set it up, using 2 different parameters: 3 and 7.

    Comment by moontrader — September 12, 2008 @ 7:06 am | Reply

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