Luna $ Ticks

September 29, 2008

The Vortex, Day 1 of 4

Filed under: Trading SPX SPY — moontrader @ 4:09 pm

As I said before, days 09/29 through 10/02 could be the culmination of the correction from last year’s top on October 11th. This is exactly what seems to be happening. Today we got a new low for the year after the Congress refused to pass the controversial bailout plan and you can hear in the news all over the word “desperation.” That’s exactly what happens during a crash: people give up thinking and become absolutely irrational. Or better, people have been avoiding sell their stocks in the hope that prices would recover sooner or later, but they are realizing that the loss is never too much and it’s better to just get rid of them before they are reduced to dust. Today’s low was deep but I’m afraid there’s more to come.

Here the charts:

Last Friday’s indicators could have fooled many into believing that the trend was changing. I even posted a “neutral” outlook based on those indicators, but I kept my short positions based on the Spiral Calendar proportions. These proportions don’t work everytime, but the last one that I presented was so perfect and beautifully arranged that it was just too much to ignore it. Notice in the chart above that DPO is just at 09/18 and 01/22 levels, and I’ll consider calling a bottom only when we see those levels breached.

VIX is just amazing:

Today, for the first time, we closed above the 37.57 level. And here’s an interesting chart:

Looks like the Financial Sector is not done yet. And things don’t look good for them, just check the “matrix:”

The most redish ones, the ones at the top of the list, are all banks showing incredible plunges. Just look at Wachovia: it’s worth one cent. 75 of these stocks worth a pack of chewing gum.

To close this post, I just want to recommend extreme caution. If you closed your position today with an amazing profit, try to keep it. Get used to the idea that you actually HAVE that money instead of trying to multiply it during this high volatile market. If you decide to re-enter positions, either side, do it with a tiny position of your profit. Don’t put it at risk. Don’t look back and think how much money you left at the table: instead. you should look ahead. I would even recommend that you treat yourself (and your partner) a nice dinner at a good restaurant. In this way, you not only get used to the idea that you made some money today, but you also see what money can do for you when well employed.

This was the first day of my Vortex window. Let’s see what await us in the next couple of days. My guess is that we’re going to hit a bottom tomorrow, as people will digest during their dinner what the Congress did today and issue selling orders at market prices.

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13 Comments »

  1. Just wanted to leave a few comments for you following up on my first comment a few days ago, re: possible divergences in the $BKX.

    1) Just b/c there appeared to be a lack of a lower low on the $BKX doesn’t mean anything if the entire market is poised one way (ie., trend is down). The fact that $BKX did not confirm the primary trend may have been more a facet of implementation of no-short rules than natural market forces taking the course
    2) I commend you = you obviously have a well documented plan, & you follow a system which makes sense to you. You’ve obviously put a lot of work into understanding & adhering to your system.
    3) I recently bought a book called “Trend Following”. Long story short, I’ve been a participant in market education for just over 8 years, & am only realizing now that it takes a lot of conviction, discipline, & honesty to recognize what the trend is. You must be 100% honest with yourself if you want to win at this game. This includes having a plan, trading your plan, & having contingencies built into your plan which ensure that you live to trade tomorrow (ie., a stop system). If the market trends only 20-30% of the time & is directionless 60-70% of the time, then the majority of “traders” without plans, systems & conviction will lose more in the 60-70% timeframe & will gain less in the 20-30% timeframe b/c they don’t have the where-withal to know when to cut losses & ride profits
    4) No matter what’s being portrayed by the media right now (CNN/CNBC/newsprint), it’s all bunk. The trend is down, & has been down for some time. These are the times when the elite/astute traders w/ conviction, honesty & recognition of the trend make the most $.
    5) Was watching CNBC & CNN for a bit this evening & they had a series of NYSE floor brokers/traders who looked they’d been impaled. CNBC’s fast money panel – same thing. These people are obviously on the wrong side of the trend.

    Kudos to whoever made out like bandits today. I’m only at the beginning of my lifelong learning curve.

    Comment by mktstudent — September 29, 2008 @ 5:02 pm | Reply

  2. I love the window. What software are you using for that? I’m not good enough to make a call for tomorrow…

    Comment by George — September 29, 2008 @ 6:00 pm | Reply

  3. Look at the reds.
    Is it that time of the month???

    Comment by T.B.A. — September 29, 2008 @ 7:42 pm | Reply

  4. 20-30 & 70-80, not 60-70 – was writing too quickly

    Comment by mktstudent — September 29, 2008 @ 9:07 pm | Reply

  5. Wonderful stuff; thanks, as always!

    Comment by timprophet — September 29, 2008 @ 9:34 pm | Reply

  6. am watchin yo stuff man! an it lookin very intrestin…

    Comment by peterthepainter — September 30, 2008 @ 3:00 am | Reply

  7. MKStudent,
    Good points. Discipline is a must in trading and it comes with time and effort, otherwise you don’t survive the market. Planning a trade is also key, as well as neutralizing emotions, whatever they are: greed and fear are the basic ones.

    Comment by moontrader — September 30, 2008 @ 8:53 am | Reply

  8. George, are you referring to the matrix with the stocks? I use Thinkorswim platform and it’s great.

    Comment by moontrader — September 30, 2008 @ 8:54 am | Reply

  9. Hey aurelius, that’s exactly the end of the month.

    Comment by moontrader — September 30, 2008 @ 8:55 am | Reply

  10. Peterthepainter, thanks for passing by, bro.

    Comment by moontrader — September 30, 2008 @ 8:56 am | Reply

  11. Hi Moon,

    Do you think the market bottomed on Monday based on today’s performance? Thanks.

    Comment by David YZ — September 30, 2008 @ 2:12 pm | Reply

  12. David, it’s possible, although I would call a bottom only after this 4-day time window. Inside this window anything can happen and retracements have been very deep.

    Comment by moontrader — September 30, 2008 @ 2:53 pm | Reply

  13. Hi Moon,
    What about “The Vortex, Day 2 of 4”, I can’t wait. As always, I am expecting your posting for today. Thank you first.

    Comment by David YZ — September 30, 2008 @ 6:08 pm | Reply


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