Luna $ Ticks

September 24, 2008

WaMu Next?

Filed under: Trading SPX SPY — moontrader @ 3:57 pm

First of all, Tim Knight from Slope of Hope, put a link to this blog in one of his posts today. I really couldn’t feel more honored. I’ve been in and out of the financial market many times (including trading floor experience during the late 80’s, when Technical Analysis was made by a bunch of nerds using pencils and rulers in a dark corner of the brokerage firm) and this year I came back in and found out – through Thinkorswim – about his blog. Since then I’ve learned a lot about TA and trading. One of the most valuables lessons you can draw from his charts is how to keep things simple and… visual! It is not as obvious as it might sound. Anyway, thanks Tim.

Ok, back to the market. Here’s a piece of today’s S&P500 map (which one of this blog’s readers call “The Matrix”):

Things seem to be deteriorating for WaMu. There’s been a lot of rumors about the bank being on the verge of an intervention and, if you look around in the internet, you’ll see people talking about a rush to ATM’s and branches to cash their savings. When was the last time something like that happened? Dozens of years ago. Unlike Bear Sterns and Lehman Brothers, WaMu is a commercial bank. A problem with this bank would be a blow in people’s confidence on the government ability to deal with this financial crisis.

Today the market ended flat. This is just a pause in the trend. No sign of a reversal yet. To keep this post short, I won’t be showing SPX/SPY charts since the downtrend scenario remains intact. Instead, I will show again yesterday’s chart with the time target for a bottom and an extra proportion that adds up to the 9/29 – 10/02 window:

I just forgot the VF2 which relates to the important September 2nd top. Although all the tops shown above belong to the “even” series, they make for a most beautiful proportion. It’s just a perfect Spiral! I believe the whole correction from last October’s top will culminate sometime next week.

Just to conclude, during Bernanke’s testify, Senator Ron Paul said something like: “If everything is overpriced, let things go back to their real price.” He then said that the 700$ billion would be used only to feed inflation, something that the Fed has been battling for ever. I’m not sure this plan will come so easy, so soon.



  1. I couldn’t agree more. Ron Paul’s comments were right on target – let the markets correct themselves, they always do. Bernanke did not look comfortable when Mr. Paul was speaking. If big banks go under (because of their stupidity and greed) so be it. Sure it’ll hurt the market, but other banks and brokerage companies will be created or those left standing will fill the void and it won’t be the end of the world. Every effort the Fed and government has done to stop this train from derailing has not worked and throwing more money at isn’t the solution.

    Buffet’s discounted buy of $5 Billion GS stock, giving him an over $1 billion win today isn’t going to sit well with the average American. Jeez, we loaned him $85 billion to “save” AIG (and it doesn’t look like that’s going to work either) and then Buffet pulls this stunt.

    The inmates have taken over the asylum!

    C. Kron

    Comment by Charlie Kron — September 24, 2008 @ 4:56 pm | Reply

  2. Excellent post and I couldn’t agree more c. Kron, the more I think about what the government is doing the worse I feel about the future of this country.

    Comment by Jigsaw — September 24, 2008 @ 5:46 pm | Reply

  3. Kron, I totally agree. They should have imposed rules in the past to avoid create excess of credit which led to overpriced stocks. Now it’s too late and, even if the plan is approved, it won’t do much to solve the crisis. The market has been running free, going up, now it’s time to correct. The plan will just relief the symptoms, not cure the real disease.

    Comment by moontrader — September 24, 2008 @ 6:01 pm | Reply

  4. Great thoughts on market direction. I would antisipate an up move in the market starting as early as tomorrow and lasting into monday-tuesday. I feel to be short into the bailout is taking too much risk. The short was the original pop on rumoured news which has worked out for 100 S&P points of downside. Just my thoughts….

    Comment by mike jacques — September 24, 2008 @ 6:33 pm | Reply

  5. Mike, in a market like this you’re taking too much risk on both sides. I’m following my criteria in charts, while fundamentals come second. But after reading some articles around, from well known economists, I realize that the plan won’t do much to stop the crisis or even lessen it.

    Comment by moontrader — September 24, 2008 @ 6:45 pm | Reply

  6. Ron Paul is right on. That’s why no one will listen to him. Remember the primaries when he was constantly ignored even though he clearly had the best ideas and the most knowledge of economics? I hate to say it, but most people are stupid – and stupid people get stupid leaders. And stupid bailouts.

    Comment by Bill — September 24, 2008 @ 8:30 pm | Reply

  7. I commented on Shadow Trader at TOS today that Ron Paul was using logic and reason to explain his position and why the government shouldn’t bailout anyone, which made sense. Right after that I wrote, “That thinking (logic and reason) will never work in government!” Sure enough, Bush talks to America basically telling everyone turn over 700 billion to save YOUR JOB, save YOUR 401K, save YOUR ability to borrow money! Jeez, If I have to spend that much to save all that maybe I should be looking at Costa Rican real estate.

    And what is Obama trying to pull? He wouldn’t enjoin McCain in a dialog when asked many times in previous months, but now all of sudden when McCain asks to delay Friday’s debate Obama says, “Oh, no we can’t to that. We have jets that can fly you to the debate. No delay!” Give me a friggin’ break. McCain has put his country first, has stopped his campaign so he can go back to work as a Senator to resolve the financial crisis. Sorry Obama, but if you do a little study of the 1929 crash we are no way near the seriousness of that crash. Is Obama afraid to add a few more days to his 143 as a US Senator? Or is he more afraid he may actually have to vote on this issue? And his comment, “I’ll be available if you need my help?” is insulting at best. Obame needs to get back to work and resolve this problem as a SENATOR. Obama loses on this one.

    C. Kron

    Comment by Charlie Kron — September 24, 2008 @ 9:38 pm | Reply

  8. Ron PAUl is another Hitler.
    You people really believe all that Texas Bull he feeds you.
    C Kron and Bill I guess you are blonde hair with blue eyes and have confederate flags in your bedroom, and still use “nigger” in you everyday language.
    You two are Disqusting.

    Comment by zee — September 25, 2008 @ 1:31 am | Reply

  9. Zee – I don’t know you, but you are obviously a very unhappy and ignorant person. I do not have blond hair, nor do I have blue eyes, the “n” word is not in my vocabulary, I’m not from the South and have no reason to have a Confederate flag. And surprise, I’m not a Democrat.

    I am able to put a logical argument together using complete sentences. No, I am not always right. One thing I don’t do to try and persuade someone to a logical conclusion is attack that individual (that is done only to avoid discussing the issue). You made a statement that Ron Paul is another Hitler. That is quite a statement. Yet you provide no statement of facts to persuade us into believing in your statement. That shows ignorance.

    If you have a point and can put up an argument to counter what I said please do so. I’m sure others will see your post as I do.

    C. Kron

    Comment by Charlie Kron — September 25, 2008 @ 6:51 pm | Reply

  10. Nice call, WaMu RIP.

    Comment by pythagoruz — September 25, 2008 @ 9:03 pm | Reply

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