Luna $ Ticks

October 20, 2008

More Signs of a Trend Reversal

Filed under: Trading SPX SPY — moontrader @ 3:46 pm

But no confirmation yet. Today’s action threatens the bearish scenario for the next days, but doesn’t negate yet the possibility of a new bottom around the corner.

Today we had what the trader DiNapoli calls a Double RePo, i.e., a Double RePenetration (don’t get excited!) of the DMA 3×3: one close above it, then a close below it, then another close above it. Along with buying signals from MACD and Stochastics, it means that a bottom is in place or we are very close to it. So, why am I still bearish? Check this out:

First of all, we closed right on top of DMA 7×5 (actually, SPY came a little below it during after-hours). Second, tomorrow DMA 7×5 will be 97.52 and DMA 3×3 will be 94.55. Third, volume today was extremely low. So, let’s see if this movement up will hold tomorrow. Another close above DMA 3×3 and a close above 7×5 will be a serious warning to the short-term bearish scenario.

In case tomorrow we do go down closing below DMA’s 3×3 and 7×5, and resume the downtrend for the last push down, here is a new date projection I have towards the end of the month:

This is pretty interesting since the focus dates shown above relate to both July 15th bottom and the window between October 27th and 30th. I mean:

  • the bottom of January 22nd relates to the bottom of July 15th and to the day October 27th;
  • the bottom of July 15th relates to the bottom of September 17th and to the day October 29th;
  • the bottom of May 9th relates to the bottom of July 15th and to the day October 28th.

Since this is quite a beautiful set of correlating dates, I believe we’ll have some sort of an important bottom between Monday and Thursday next week.



  1. Below is a chart of ES Z8 (NOT the S&P). Note the triangular pattern is framed in red. The pitchfork is a valid one and has retested the bottom line several times. If we break out and above the triangle then we would be on target to move to the .25 line(green), which has also been tested a few times. If there is a further move up we should then target the median line at about 1115-1125. But first lets see how that triangle plays out before making any unqualified projections.

    For Gold (GC Z8), I’m waiting for a break above or a rejection at the median line before taking any action and then only on a perfect setup.

    Comment by Hansons — October 20, 2008 @ 10:50 pm | Reply

  2. Hi Moon,

    I have a lot shorts. Now the market is weak. Should we cover some, or the down hill just begins. (10:00)

    Comment by David YZ — October 21, 2008 @ 12:03 pm | Reply

  3. David, I can’t answer that question. As I said, there are signs of a reversal approaching, but that doesn’t mean it’s behind us. I’m pretty bearish, loaded with puts and holding onto them. But that’s me. The market is pretty weak right now.

    Comment by moontrader — October 21, 2008 @ 12:11 pm | Reply

  4. Thanks for your instant message, particularly with with us what you are doing. I will wait a while.

    Comment by David YZ — October 21, 2008 @ 12:14 pm | Reply

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