Luna $ Ticks

October 16, 2008

Shot Up

Filed under: Trading SPX SPY — moontrader @ 3:26 pm

Today everything seemed to be going just as expected, with futures shooting up something like 3% one hour before the bell. Then the numbers spoiled the party and SPY slipped out of the nice channel I draw yesterday, plus it came below the 88.50 mark I believed important. Therefore, I was stopped and I sat waiting for a better entry point.

While I was having lunch, VIX peaked at an incredible 81.13 while Friday’s low remained untouched. This can be another sign of a bottom approaching – but not yet there! Ok. Then, the magic happened. SPY sneaked back into the channel and touched the upper line. Here the 5 min chart:

After touching the upper line, it retraced back below the 75% line, nicely rubbing it for an hour or so. That’s pretty much a good sign to go long. Here’s another sign: decreasing volume. And the last one:

SPY closed slightly above DMA 3×3 AND the weekly pivot. Notice also volume today was higher than yesterday, and it was concentrated in the last hour of the day. Although daily MACD is still down, I believe there is another bear market rally coming, and it’s coming tomorrow.

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17 Comments »

  1. Rally tomorrow is given with Google’s earnings. Good catch from TA.

    Comment by Karthik — October 16, 2008 @ 6:13 pm | Reply

  2. Hi Moontrader,
    Thank you for all you do. It is very helpful.
    You said in your post-“Although daily MACD is still down, I believe there is another bear market rally coming, and it’s coming tomorrow.
    However, this is also a sign that we might have another strong bear market rally ahead.”
    Do I read this correctly as you saying you expect two bear rallies ahead including tomorrow, i.e. rally tomorrow (FRI) and another after a pull back—or — are you simply saying the rally tomorrow will simply continue on with little or no pullback???
    Thanks in advance.

    Comment by jj — October 16, 2008 @ 7:16 pm | Reply

  3. JJ, it’s actually a mistake I made. I wrote, rewrote, forgot to delete it.

    Comment by moontrader — October 16, 2008 @ 7:59 pm | Reply

  4. Hi Moon,

    What do you mean “another bear rally coming. and it’s coming tomorrow”?

    Does it mean the rally actually from today will continue to tomorrow (FRI), AND next week.
    (In your previous post, you pretty much said from next week, market will drop again)?

    Thanks.

    Comment by David YZ — October 16, 2008 @ 8:48 pm | Reply

  5. David,

    I’m basically saying that tomorrow (Friday) we’ll have a rally. Then next week I think we’ll go down and retest or even breach last Friday’s low.

    Comment by moontrader — October 16, 2008 @ 9:15 pm | Reply

  6. financial astrologer Tim Bost projects some numbers/dates
    http://yorba.tv/archive-2008-10-98-4-start.htm

    10/29 – SPX 1208
    11/4 – SPX 815
    11/7 – SPX 895

    SPX 800 – critical support level

    Comment by TObject — October 17, 2008 @ 12:12 am | Reply

  7. Careful here, maybe we won’t bounce. A few pitchforks that could indicate more trouble dead ahead.

    http://www.screencast.com/t/AfxNn2bj

    Comment by Hansons — October 17, 2008 @ 4:38 am | Reply

  8. moontrader, your fork was a bit wide.
    Smaller forks would’ve gave you a better signal :)

    Comment by Fork_Master_Serg — October 17, 2008 @ 9:21 am | Reply

  9. Serg, I really don’t know how to use forks, but I’ve seen from your charts that they work great. Where can I learn more about it?

    Comment by moontrader — October 17, 2008 @ 1:07 pm | Reply

  10. as soon as I write a book :)
    here some info http://www.medianline.com/

    Comment by Fork_Master_Serg — October 17, 2008 @ 1:10 pm | Reply

  11. Enough with the rally, I’m going short and carrying my position over the weekend.

    Comment by moontrader — October 17, 2008 @ 2:16 pm | Reply

  12. thanks for the link, serg.

    Comment by moontrader — October 17, 2008 @ 2:17 pm | Reply

  13. Fork suggest we may break 2002 lows
    Expecting Black Friday next week – 7-27 Lunar Day

    Comment by Fork_Master_Serg — October 17, 2008 @ 5:19 pm | Reply

  14. Serg, couldn’t agree more. I hope you’re well positioned for that as I am.

    Comment by moontrader — October 17, 2008 @ 5:25 pm | Reply

  15. Moon,
    What is the optimum way of positioning for this unprecedented expectation? Its just too scary and I have not been used to this kind of scenario.

    Comment by Rainman — October 17, 2008 @ 6:36 pm | Reply

  16. Rainman, depends on your profile, how aggressive/conservative you are, how comfortable you feel in a position. You can play it with in the money options, two to three months expiration, or you can have out the money options, less than one month expiration. To start, I would say: get in the money options, two to three months expiration. Something like SPY December 100 put. How many? It depends on your portfolio, but my rule is: nothing that keeps you awake through the night. You need to be able to sleep over a position. If it’s too big, you just lose your reasoning, becomes terrified with a tick in the wrong way, and will be easily whipsawed. Have your own criteria, but play small. And remember: ANYTHING CAN HAPPEN.

    Comment by moontrader — October 17, 2008 @ 6:58 pm | Reply

  17. Thanks for the comment Moon. We sure are ready for historic times.

    Comment by Rainman — October 19, 2008 @ 9:34 pm | Reply


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