Luna $ Ticks

September 23, 2008

Clock Ticking for the Fed

Filed under: Trading SPX SPY — moontrader @ 4:00 pm

Two weeks ago the Fed refused to help Lehman Brothers, leaving the clock tick for the agonizing old institution during what might have been an endless weekend. The Fed then realized the mistake and is now asking the Congress to help. But the Congress doesn’t seem to be willing to collaborate unconditionally and rush things out. Paulson is urging them to act immediately because he knows that credit is growing exponentially scarse with each second. The clock is now ticking for the Fed. Ironic, no?

Ok, charts. SPY:

MACD down, and we’re back below the three DMA’s. There might be a little bounce up, but nothing to be worried about so far. Since last week I have puts, and I saw my profits go from almost 200% back to 10%, but at no moment I saw a loss. I’m constantly managing profit. So far so good. In the VIX you can also see that we might have a little bounce up:

We are heading to the resistance line and, as soon as we breach it, we will probably see a huge sell off. The dotted trendline held precisely and MACD is hugely up: momentum in negative sentiment is increasing. This is also evidenced in Treasuries: the “ultimate safe haven.” Flow to government notes is increasing.

And last, I want to show my next window for the end of this huge correction:

Two things here. First, notice that I’m using mostly the “even” series. This makes me feel a little uncomfortable since the “odd” series was producing quite reliable and precise turning points. Second, notice that the window is a little wider: the reversal date might happen during a period of 4 days, between Monday and Thursday next week. And notice also that I use an element from the “odd” series to support the window.

A curiosity. There’s an old jewish say, something like: “Buy on Rosh Hashaná, sell on Yom Kippur.” Well, 09/29 is Rosh Hashaná.

Advertisements

15 Comments »

  1. Next Monday, 09/29 with a successful retest 1130.

    Comment by David YZ — September 23, 2008 @ 7:09 pm | Reply

  2. David, I just updated the post. Funny, I mentioned next Monday.

    Comment by moontrader — September 23, 2008 @ 8:06 pm | Reply

  3. What do you think the target low will be? Also do you have a target high and a time frame to reach there?

    Comment by Adam — September 23, 2008 @ 9:13 pm | Reply

  4. Adam, I have a target below 1000. I don’t know how the Fed’s bailout plan will affect the target, so I will try to play it safely. No, I don’t have a target high, let’s first see where this move down will end.

    Comment by moontrader — September 23, 2008 @ 9:37 pm | Reply

  5. I enjoy your work; thanks!

    Comment by timprophet — September 24, 2008 @ 12:21 am | Reply

  6. If the market treads water or climbs the urgency of a bail out will lessen. Which may lead to Parness’s prediction of a 1000 point one day drop in the DOW.

    Comment by Jigsaw — September 24, 2008 @ 9:27 am | Reply

  7. just got here via tim night tip! will be watching from now on! ptp

    Comment by peterthepainter — September 24, 2008 @ 11:33 am | Reply

  8. Yom Kippur is the 9th October.

    Love this site, MoonTrader.

    Comment by Urszula — September 24, 2008 @ 11:50 am | Reply

  9. I have some sort of high for the CAC,FT100 and SPX on Monday 6th October.

    Bradley dates have been good this year and an important turn on the 27th October, and i have some sort of low on the 28th.

    Urbansurvival expects the 7th to be very important and i am wondering about a crash into the 27th especially as many think the bear has ended or has stalled for a few months.

    Comment by Barcode — September 24, 2008 @ 11:50 am | Reply

  10. GE and IBM are now on the do not short list.
    Short sellers provide a break on the system so if the long only funds decide to sell there will be a lack of brakes to slow the market down. Sell on Yom Kippur,which is the 8th, and this makes me more concerned about a crash. Hopefully it doesn’t come to pass.

    Comment by Barcode — September 24, 2008 @ 12:10 pm | Reply

  11. Lehman was intentionally bankrupted to save J.P. Morgan
    http://www.financialsense.com/Market/kirby/2008/0922.html

    Comment by Fork_Master_Serg — September 24, 2008 @ 12:23 pm | Reply

  12. Also Oct 6 Sun-Jupiter square

    Comment by Fork_Master_Serg — September 24, 2008 @ 12:30 pm | Reply

  13. Adam, my target low is below 1000, but I would be cautious. That would mean almost 20% drop in a couple of trading sessions. Quite a crash.

    Comment by moontrader — September 24, 2008 @ 2:13 pm | Reply

  14. Thank you all for dropping by and thanks Tim for the link.

    Comment by moontrader — September 24, 2008 @ 2:14 pm | Reply

  15. Lovely work. Thank you.

    Comment by sizzler — September 24, 2008 @ 3:13 pm | 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: