Luna $ Ticks

October 1, 2008

My Strategy for 10/01/08

Filed under: Trading SPX SPY — moontrader @ 8:26 am

Good Morning everybody. Futures right now, 9:04am, point to a lower open and today the Senate will attempt to vote on a new version of the bailout plan. Two days ago, on Monday, we had the biggest ever Dow drop in points and some are calling the bottom. Yesterday I said that I would prefer to call the bottom only after this 4 days window is over. Yesterday’s rally was stronger than I would imagine and, if we’re going to breach Monday’s lows, then today we absolutely need to go back down, and deep. Also, as I said before, any new low during this 4-day window would make a perfect proportion in time with the tops of 10/11/07, 05/19/08, 08/11/08 and 09/02/08. Plus, we actually hit on Monday a perfect Fib target which is inside a long-term consolidation area from 2004. Check this out:

This is a monthly SPX chart. Consolidation area inside the red rectangle, green arrow pointing to Monday’s bottom. Notice that yesterday’s close coincides with the high in the consolidation area, both marked with blue arrows.

Here you can see a perfect Fib target reached. Since we are inside the consolidation area and we have a perfect fib target reached plus a perfect time proportion with the tops that I mentioned before, a medium term bottom could be in place.

So, here is my strategy. For those still short, I would put a stoploss on yesterday’s high. If we’re going to have a new low, then it has to come between today and tomorrow, and today we really need to go down and deep. The first target would be 1060, then 1025, then 980. In any case, that would mean a huge drop today. And today we’ll have the Senate try to pass a new bailout plan and through it back to the Congress. This time I don’t think they’ll fail it.

All my indicators remain down.

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