Luna $ Ticks

October 2, 2008

The Vortex – Day 4 of 4 – Let’s make it 5

Filed under: Trading SPX SPY — moontrader @ 7:18 pm

Sorry about that, but yesterday’s comment from reader BullnBear87 made think a lot about my call for a bottom. He was actually right about the main indicators I use: MACD, Stochastics, DPO and the 3 DMA’s are still pointing well down and there seems to be no clear sign of a reversal. Today SPX closed very near to Monday’s low which suggests that we might still have room left to the downside. After a careful re-analysis of the charts, here is what I think. First of all, indicators:

They are well down and there’s nothing that indicates a trend reversal approaching. So, that’s it with the indicators. Now let’s see the Spiral Calendar projection:

Let me clarify something. The 4-day window I had from 09/29 to 10/02 was based on 4 tops: 10/11/07, 05/19/08, 08/11/08 and 09/02/08. During these four days we had a huge drop on Monday, then a bounce back and then, today, we closed very near to Monday’s low. This just doesn’t look like the end of this correction. So, here’s what I did: I isolated the VF12 top, which projected a perfect bottom on Monday with zero tolerance (which is quite impressive, since we are talking a year long period). The other 3 tops project a window that doesn’t go much further away from the first window I had: it just adds 1 day to it, with a tolerance of only 2 days. The prediction is still valid, since we are using 3 dates that converge in a fairly tight time window. Monday 5th would be too far away considering the accuracy of these projections.

So, I think tomorrow, Friday, could be a pretty negative day for the stocks and possibly the first major bottom of this correction. Usually, the first leg down in corrections of this magnitude, like the one in 1929, ends in capitulation, which still didn’t happen. That would be the sign of a reversal.

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12 Comments »

  1. I appreciate you referencing me in your blog. In your analysis for tomorrow, would you consider an intra day low say before the vote followed by a huge reversal and a close at the high an indication of capitulation? This is what happened on 1/23. Or do you look for some other indicators to provide you with the necessary confirmation to declare the bottom?

    Comment by bullnbear87 — October 2, 2008 @ 7:37 pm | Reply

  2. Very impressive how precise the projections are. You refer to VF12, VF8, etc. What kind of indicators are these? Can this be projected in ProphetCharts or is there an arcane calcuation?

    Thanks!

    Comment by Lawrence Chiu — October 2, 2008 @ 7:44 pm | Reply

  3. Libor is setting 20 bps higher for tomorrow, 2yr swaps all time high today, more borrowing from the Fed from banks, dismal earnings season on the way. Not seeing how we can really bounce much….unless the fed cuts rates. We know the House will pass the bill and I doubt jobs come in way above expectations. The Fed probably wants to keep rate cuts until the market really tanks because thats all they got. Let me know if I’m missing something or if my logic is off.

    Comment by JC — October 2, 2008 @ 8:24 pm | Reply

  4. Technical capitulation occurred on the NYSE, but is 20 points shy on SPX and about 450 shy on DOW, but we are close.

    Comment by GM — October 2, 2008 @ 11:16 pm | Reply

  5. i am not a trader but i am interested in your views…bounces do not interest me as i am a waitin serious bottoms..which i believe will not come before the election…

    Comment by peterthepainter — October 3, 2008 @ 6:35 am | Reply

  6. Looks like we’re not having a plunge today, that specific window for a bottom is definitely over and a short or medium term bottom could be in place. However, indicators are still down. I would wait for a moment in which I see things more clear before placing a trade.

    Comment by moontrader — October 3, 2008 @ 9:08 am | Reply

  7. Lawrence, there’s nothing arcane to it, those periods come from the Spiral Calendar method, which was developed by Christopher Carolan. They are multiples of one moon cycle, which is 29.56 days.

    Comment by moontrader — October 3, 2008 @ 9:15 am | Reply

  8. Do you have Oct 10 as cycle date? this guy does.
    http://ptv-investing.com/blog/2008/10/03/sp500-index-roadmap/

    Comment by Fork_Master_Serg — October 3, 2008 @ 11:47 am | Reply

  9. Fork, interesting chart. Right now I don’t see Oct 10th as significant. My next important date is towards the end of October, between the 26th and the 30th. I’ll go over the dates this weekend to come up with a scenario for the next week.

    Comment by moontrader — October 3, 2008 @ 12:06 pm | Reply

  10. BullnBear, indicators reverse just after the bottom, like it happened on July 15th. They also give a hint they can be reverting soon: for instance, delta on MACD gets close to zero and/or Stochastics point up. I have to see the reversal in the daily charts. However, it’s all about context and it depends a lot on your time frame to trade.

    Comment by moontrader — October 3, 2008 @ 12:13 pm | Reply

  11. Thanks dude, you nailed it.

    http://lcmarket.blogspot.com/2008/10/thank-you-moontrader.html

    Comment by Lawrence Chiu — October 4, 2008 @ 12:11 am | Reply

  12. > My next important date is towards the end of October, between the 26th and the 30th
    Mine too
    It’s just 25-26 is weekend
    I ordered Siral calendar book, hope it ships soon

    Comment by Fork_Master_Serg — October 4, 2008 @ 12:29 pm | Reply


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