Luna $ Ticks

October 1, 2008

The Vortex, Day 3 of 4 – We Might Have a Bottom

Filed under: Trading SPX SPY — moontrader @ 3:40 pm

During most of the day today the indexes were down, but they recovered towards the end, closing almost positive. Unless we have a disaster tonight at the Senate – very unlikely after Monday’s “warning” – I don’t see prices going below Monday’s bottom. Therefore, according to my Spiral Calendar date projections, we might have a bottom in place. But let’s keep the mind open, anything can happen, especially because we are inside that time window.

This chart that I showed earlier today is important:

Monday’s bottom was inside the 2004 consolidation area and yesterday’s close was exactly on the top of this area, which is near today’s close as well.

The next chart is also important, because it shows a perfect Fib target reached on Monday:

The only thing that worries me at this point is VIX, still above January’s peak:

If tomorrow we don’t go below Monday’s low, I’ll start looking for an entry point, having Monday’s low as a contingent stop.

Upon request from BullnBear87, here’s SPY with a set of studies:

As you can see, all indicators still down, so we can go down badly tomorrow (Note: Tuesday low is bad data). But, if we don’t, then I would expect the indicators to reverse soon. Right now I want to sit and watch tomorrow, and I am all cash. Remember, we are still inside the 4-day window, so anything can happen.

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7 Comments »

  1. Your other indicators such as DPO, MACD, $DJUSFN all have not turned to signal a “buy” but you are now calling Monday’s low as a bottom? How is it all those measures are unimportant now as you call a bottom? Can you please clarify?

    Comment by bullnbear87 — October 1, 2008 @ 5:26 pm | Reply

  2. Bullnbear, sure, let me clarify. The date window is a possible trend reversal point in terms of time. This means that inside that window, there’s a good chance that whatever low (considering it’s lower than the previous) you have might be a short/medium term low. These date projections allow you to recognize the reversal and anticipate the change in the indicators. If you want to be conservative, you would first wait for the indicators to reverse after the window and then look for a good entry point.
    That’s why I’m saying that we might have a bottom. But first I would like to see what’s going to happen tomorrow.

    Comment by moontrader — October 1, 2008 @ 5:59 pm | Reply

  3. Maybe getting ahead of myself here, but where do you estimate the bounce will go to? I would assume based on pure support & resistance only, that it needs to clear 1275 first, before a push to 1325…

    Also – given that the overall trend is down, & that a counter-trend rally could “theoretically” occur, what are your targets for the “overall” primary downtrend? The 2002 lows?

    Trying to equate/conceptualize what we’re experiencing here vs. what we experienced during the 00-02 bear market.

    Thanks

    Comment by mktstudent — October 1, 2008 @ 6:46 pm | Reply

  4. I’m just back home from a dinner and saw that the bill passed… and futures are down! Tomorrow (Thursday) will be an interesting day!

    Comment by moontrader — October 1, 2008 @ 8:56 pm | Reply

  5. MK, if Monday’s bottom isn’t breached on Thursday – which is not guaranteed – then I would see 1325 as a target. If Monday’s bottom is breached, then we’d need to see how deep the market goes to have a better sense of a target.

    Comment by moontrader — October 1, 2008 @ 9:01 pm | Reply

  6. Moon, it is too hard to believe that the futures are down. (9 hours before market open, it may change). Would you please make it more clearer, that no matter down or up tomorrow, no matter deep down or slight down tomorrow, the market should bottom tomorrow. Is it right? Since tomorrow is The Vortex, Day 4 of 4. Thanks

    Comment by David YZ — October 1, 2008 @ 10:57 pm | Reply

  7. David, it’s not that the market “should” bottom. Thursday is the last day in the window, so, according to my prediction (which might be right, might be wrong) there is still a chance the market can go below Monday’s low. The thing is, whatever bottom you have during these four days, this will be the first major bottom of the correction that started last year on 10/11. As I said in a previous post, this 4-day window would be the culmination of the correction. From here – according to my analysis – markets would go higher in a correction of a correction (a wave B, if you’re familiar with Elliott Waves).

    Comment by moontrader — October 2, 2008 @ 6:26 am | Reply


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