Luna $ Ticks

September 18, 2008

One Day Up, One Day Down, Today Up, Tomorrow…

Filed under: Trading SPX SPY — moontrader @ 3:27 pm

Down. The wildest swings I’ve seen in a while, and the best thing to do in these moments is to keep cool and stick to your charts. Forget your emotions. If you have heart problems, you either bet a tiny tiny position or just stay out and go play golf or whatever your pocket can afford. My options portfolio goes nuts everyday but, apart from a small slice in September puts, my puts are doing just great, and I wouldn’t touch them yet. Today’s strong rally at the end wasn’t enough to change the scenario not even in the short run, as my Stochastics show:

Stochastics still in sell mode – let alone MACD – and DPO off lows, we’re ready for another drop.

Vix has finally pierced through January’s peak, but closed beneath it.

And the Dow Financials is getting closer to July’s low, but not there yet:

At this point, I’m really calling for a bottom between tomorrow and Monday. If we do see panic and S&P500 drops below 1000 (FYI, my target is 920, but that seems just too crazy!), we can start to devise a strategy to go long. But let’s think about that during the weekend. First things first: a big drop tomorrow, below today’s level.

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11 Comments »

  1. One factor is Russia’s stock market…They’re still closed. When they open again I doubt people will want to buy. This could be the catalyst that sends us lower. Seems like people forgot that today. Also, we shouldn’t forget the isuues with money markets, swap rates, Libor/short term funding.

    Comment by JC — September 18, 2008 @ 4:00 pm | Reply

  2. Moon, if your calling for a bottom tomorrow or Monday, would it be posible the end of the day rally would be close enough to Friday to say this was the bottom?

    Comment by Jigsaw — September 18, 2008 @ 4:07 pm | Reply

  3. I think the bottom is in at 1130. It may restest it on Monday but it is not going below that. The $BKX broke support @ 60, and then the market turned. The $DJUSFN also came with in 10 points of the July low and turned. With 3 days in a row for over 1000 stocks making new lows, and VIX spiking to levels not seen since 02, the puking has been done.

    You were close on calling this day, missing it by just one day. I wish you had not rattled your readers last week with a reversal of your thinking. Still you are 3 for 3 in my count! Great work and keep us posted where this is headed next.

    Thanks

    Comment by Adam — September 18, 2008 @ 4:19 pm | Reply

  4. JC, great point. Jigsaw, yes, anything can happen. Today’s rally will be corrected tomorrow at a certain point, but in the last days, what started as a correction turned out to be major impulsive waves down to new lows. Today’s range in SPX was 80 points. That’s a wild swing for one day. Everyday the trading range grows exponentially wider.

    Comment by moontrader — September 18, 2008 @ 4:19 pm | Reply

  5. Hey Adam, last week I just called for caution and a change in strategy, but I was clear: going below 121.61 would be a sell signal.

    Comment by moontrader — September 18, 2008 @ 4:22 pm | Reply

  6. Moontrader any possibility that tomorrow or Monday may actually be a top as I read somewhere that 19 / 22 were cycle turn dates but that those dates could either be a top or a bottom. I don’t know if this is a stupid question or not but I thought I’d ask.

    Comment by Novice — September 18, 2008 @ 5:07 pm | Reply

  7. Moontrader,

    Love your blog and thanks for all your hard work. Any chance that 1130 may have been the bottom of this leg down? After all, VIX was at multi year highs and volume at highs of the day.

    Comment by Dave — September 18, 2008 @ 6:48 pm | Reply

  8. I want to believe what you say but when I see today’s action into close and then the AH quotes as well as the announcements that SEC is making, I am finding it very hard to believe that S&P is gonna hit 1000 tomorrow (Friday). Right now it is 1220+. A drop of 200+ points in a day… that would be a CRASH… Do you see a reason that would bring about that CRASH?

    Comment by Ashish — September 18, 2008 @ 7:02 pm | Reply

  9. Yes, there’s a chance we have a bottom in place, especially with futures sharply up (9:37pm ET = +32 SPX fut). However, I would still be cautious and wait until Monday for a confirmation of the bottom. Sometimes the rally from an important bottom is followed by a deep correction.

    Comment by moontrader — September 18, 2008 @ 8:30 pm | Reply

  10. Moon – could Monday be the TOP? The SEC just banned short selling. Anyone with a brain, including huge foreign investors, will pull their money out of the market now.

    Comment by jcoors — September 18, 2008 @ 9:00 pm | Reply

  11. Jcoors, sure, Monday could be a top as well. During the weekend I’ll reassess the situation and come up with resistance levels and check for a new date in case we don’t go below today’s bottom between Friday (unlikely) and Monday.

    Comment by moontrader — September 18, 2008 @ 10:32 pm | Reply


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