Luna $ Ticks

September 16, 2008

Something To Think About

Filed under: Trading SPX SPY — moontrader @ 3:51 pm

Today’s opening made many think it was the beginning of a crash, plunge, capitulation, doomsday, whatever. The fact is, the market ended the day up and strong, with the highest volume in 2008. The Fed left rates unchanged, Barclays might buy Lehman Brothers broker unit, AIG might get a bailout from the government, today might be reversal Tuesday, Friday is option exercise – you name between the many available news the one to drive the markets up. Many are calling the bottom and, who knows, it might be it. I prefer to stick to my charts and here’s something to think about. Two simple charts.

The two charts have the same scale and the same studies, so they can be easily compared.

First of all, the SPY chart shows that the trend is still down and there’s no sign yet of a reversal – even Stochastics is down.

Now, my point. Today SPY went well below July’s low, reaching 117 right at the opening. However, as you can see, the Financial sector is not even close to its July’s low. Just remind me: isn’t this supposed to be a crisis in the financial sector? Yes, this IS a crisis in the financial sector. So, if today was the bottom of this crisis, why hasn’t the financial sector gone below its July’s low? I don’t know, but stick with me. If the financial sector hasn’t reached July’s low, then the market was dragged down by other sectors. Which means that the real financial crisis isn’t yet reflected in the indexes. Plus, notice that the Dow Jones Financials MACD just went into negative territory.

One last thing: this is a partial map of the S&P500 index after the closing bell, sorted by gains. Notice that the leaders are mostly financial institutions, many in deep trouble: Lehman, Wamu, Merrill Lynch.

Just to finish, 9/19 or 9/22 could be an intermediate top as well. In any case, my target for the short/medium term remains well below today’s low.

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5 Comments »

  1. Thanks Moon, This was a strange day indeed, when the Fed didn’t cut rates, the logical thing would to have thought the market would have tanked. To me this is just short covering, I just hope there’s time to position ourselves for the next leg down.

    Comment by Jigsaw — September 16, 2008 @ 4:10 pm | Reply

  2. The $DJI looks today the way it normally looks after a big red candle. Todays big green candle on the SPX is a little more bothersome at first glance, but the close is well below yesterdays close, so I see nothing yet to indicate a trend change.

    I bought decent deltas with plenty of time on my DIA and SPY puts, so I’ll ride the rallys and double up if my strikes get cheap enough.

    Comment by Gary_L — September 16, 2008 @ 4:40 pm | Reply

  3. thanks Moon, good stuff.

    Comment by Anonymous — September 16, 2008 @ 4:58 pm | Reply

  4. Jigsaw “This was a strange day indeed,”
    how it was stange? it was repeat of Yesterday til 2pm
    but yesterday we went down and today we went up
    the same day, a little bit of change at the end

    Comment by Fork_Master_Serg — September 16, 2008 @ 6:24 pm | Reply

  5. they didn’t cut today because they’re going to bail out aig. they’re saving the cut for another time.

    would like to go long on spy buy even with the recent sell-off rsi(14) is still not in oversold territory. i think spy needs to at least touch 30 or go below it for an intermediate bottom.

    Comment by aymon — September 16, 2008 @ 8:58 pm | Reply


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