Luna $ Ticks

September 17, 2008

Friday or Monday?

Filed under: Trading SPX SPY — moontrader @ 3:50 pm

Looks like our scenario for a bottom on Friday, 19th, or Monday, 22nd, is absolutely valid. Here’s Dow Financials at the end of today’s trading session:

Following the logic I wrote about in yesterday’s post, you can see in the chart above that there’s still a lot of room to the downside. In the SPY chart, however, we can see the DeTrend Price Oscillator (DPO) reaching oversold levels of January, meaning that we are approaching a bottom.

Ideally, we want to see DPO below those levels, since this is supposed to be the culmination of a sell off, supposedly stronger than January once this is caused by the crisis contamination and not just one or two troubled institutions.

VIX is quickly approaching January’s level as well, having already pierced through March’s peak.

It seems that the fall is gaining an exponential momentum and we’re approaching a point in which we’ll see a capitulation: people giving up prices and placing explicit orders to sell at any price. What would cause this? Just check it out:

Yes, there’s indeed a predominant redish tone, but look closer: when would you have imagined to see stocks in the S&P priced at a couple of cents, like Lehman, Freddie and Fannie? Check other financial stocks: Morgan Stanley, Wachovia, WaMu, Merrill, Citibank. Although they are well down, they still worth much more than pennies. In other words, sooner or later (I guess sooner) people will realize they don’t need to wait until these stocks go to the pennies. When will it be? Maybe Thursday night, maybe during the weekend. What will we hit a bottom, Friday or Monday?

Advertisements

2 Comments »

  1. Thanks moon! Great analysis that I am factoring into my trading.

    Comment by jcoors — September 18, 2008 @ 10:44 am | Reply

  2. A useful site that gives me much to consider. Kudos!

    Comment by Urszula — September 18, 2008 @ 10:52 am | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: