Luna $ Ticks

October 10, 2008

Oooops!

Filed under: Trading SPX SPY — moontrader @ 9:46 pm

Yesterday I was so happy to see that the target of 920 that I had a couple of weeks ago – by that time SPX was still around 1200 – was reached, that I jumped the gun and went long. This morning, at the very opening, I was like “oooops!” The index skid a little further than I expected and I was stopped. Although my trade didn’t work out, I was amazed at the market – as I believe everybody else was – and my only question through the day was: where the hell are we heading?

Tim Knight showed, in the beginning of the day, a chart that I love and I decided to work on it a little bit. It’s a historical Dow chart, with fib fan lines having the bottom of 1932 and the top of 1999 as the reference line.

As Tim noticed, we touched that 61.8% retracement line and the market bounced up, closing just above it. Apparently, the market found some sort of support. If we don’t stop there, then what would be the next level? In the next chart I changed the reference line from the chart above, using 1987 bottom while keeping the 1999 top.

Notice the precision of the channels in the orange rectangle, and, most important, how the correction from 1999 top adhere to the fib fan lines in the green rectangle. The two bottoms on 2002 are precise to the pennies. Look also how the movement that follows touches the 50% line and then goes sideways until kissing the 61.8% support. After breaking earlier this year, the market just melted.

If you look at the first chart, you’ll see that whenever the index falls sharply, it breaks the next support fan line, and then goes back above it. However, in the second chart, the fan lines seem to be more precise. Here’s what I think might happen: there’s still some room to the downside for the Dow in the next week or so, around 7000, which should be a more strong support. Notice that this is in agreement with both charts I showed above. However, we’ll probably see a short lived bounce up in the next couple of trading sessions before the last leg down of the first big part of this huge correction.

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7 Comments »

  1. This guy uses Gann fans and it looks like Spiral Calendar

    http://ptv-investing.com/blog/

    interestingly I asked and looks like he does not know about Spiral Calendar

    Comment by Fork_Master_Serg — October 10, 2008 @ 10:40 pm | Reply

  2. Hey Fork, that’s a pretty interesting chart. His cycle numbers have nothing to do with Spiral Calendar, but he seems to have found some sort of pattern in terms of dates.

    Comment by moontrader — October 11, 2008 @ 7:19 am | Reply

  3. Here he describes the method
    http://ptv-investing.com/blog/2008/05/20/ptv-investing-gann-square-of-9/

    Comment by Fork_Master_Serg — October 11, 2008 @ 2:00 pm | Reply

  4. Hi Moon,
    I am waiting for your new post. please.

    Comment by David YZ — October 14, 2008 @ 1:18 am | Reply

  5. David YZ
    he’s observing a Full Moon ;-))

    Comment by Fork_Master_Serg — October 14, 2008 @ 11:44 am | Reply

  6. moon, you OK?

    Comment by Lawrence Chiu — October 15, 2008 @ 12:47 am | Reply

  7. moon, hope you and your family are all OK. We hope to see you here soon. if you are too busy, please just drop a line.

    Comment by David YZ — October 15, 2008 @ 1:03 am | Reply


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