Luna $ Ticks

November 7, 2008

Gotta Feel It

Filed under: Trading SPX SPY — moontrader @ 7:24 pm

Today I was pretty much confused as anybody else – I guess – and so, in the last hour before the closing bell, I prepared a post assuming a weak close. However, right before publishing it, I checked out the market and I was as much surprised as anybody else – I guess again – to see a rally in the very last minutes. That for me was a clear sign of strength but I didn’t act on it because of some mixed signals:

spy-110708

As you can see, Stochastics has a sell signal, but it’s trading in positive territory. Second, MACD has a buy signal but is trading in negative territory. The third point is quite bullish, though: SPY reacted to DMA 7×5 and to the 61.8% retracement I showed in the last post, Nasty But Perfect, going up. So, all in all, I kind of feel we’re heading up, and big. However, for that to be confirmed, Monday has to open either even or with a gap up. Target? I would say something around 108 on SPY.

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14 Comments »

  1. t would not have mattered. I restructured my almost 100 percent short position around 10 a.m. To about 50/50 short long. Tweeked through the day. My P&l stayed static all day except for a blip down when Barack spoke. Extended session gave me another pop up. I am going to watch a movie. No opinion on next week.

    Comment by Eldar Bob — November 7, 2008 @ 8:41 pm | Reply

  2. moon:
    I agree with your analysis.
    When – on what date – do you foresee the 108 target to be reached?
    Thanks.

    Comment by kantipurohit — November 8, 2008 @ 6:39 am | Reply

  3. Kanti, I don’t have a clear date, but if we do rally I believe it’s going to be something very sharp and short lived, probably sometime next week.

    Comment by moontrader — November 8, 2008 @ 11:13 am | Reply

  4. I agree as well. Of course, if we have learned anything sbout this market, it’s to expect the unexpected…

    Here’s to a great week and a great blog.

    Comment by Donn — November 8, 2008 @ 5:55 pm | Reply

  5. One question has been dogging me for a while about MACD and SMI which I hope you can clarify for me, moon.

    As I understand it, a buy signal is indicated when MACD or SMI crosses the signal line upward and vice-versa.

    But, what is significance when either MACD or SMI are trading in “positive territory” or “negative territory” in relation to a corresponding buy or sell signal?

    TIA.

    Comment by DalalStreetKing — November 8, 2008 @ 6:35 pm | Reply

  6. Dalal, when MACD is below zero means that there’s still a negative momentum, so the risk of new lows is still considerable. MACD above zero means that the trend is “officially” up. Conservative traders prefer to wait the fast MACD cross the zero line, wait for a retracement, check if MACD is still giving a buy signal, then go long. I made a couple of good calls when I saw more or less that in combination with a convergence of the 3 DMA’s converging. For instance, if everything is positive, the 3 DMA’s are converging and prices are below them, it’s a real slingshot to the upside. The opposite is obviously true. You can usually see strong action when the fast MACD is crossing the zero line. It’s like the market is finally embracing the trend with conviction.

    Comment by moontrader — November 8, 2008 @ 6:47 pm | Reply

  7. It’s possible that the rally was triggered by strength in the banks and WFC in particular. The stock opened down near its secondary pricing level and closed with a lot of buying pressure. CNBC even took the time to show the crowd on the floor around the post. Then again who knows. Time will tell.

    Comment by ZBryan2 — November 8, 2008 @ 11:43 pm | Reply

  8. moon:
    Thanks for the MACD explanation.

    Comment by DalalStreetKing — November 9, 2008 @ 1:56 pm | Reply

  9. Be careful with Hedgefunds this week, it is the last week they can pull their money. It could delay the rally or even discourage one.

    Comment by Tim — November 9, 2008 @ 2:14 pm | Reply

  10. China stimulus = huge rally probably

    Comment by jcoors — November 9, 2008 @ 2:18 pm | Reply

  11. Tim, DMA 7×5 will be my stoploss.

    Comment by moontrader — November 9, 2008 @ 2:28 pm | Reply

  12. Moontrader,
    do you do Spiral dates for gold?
    There is a rumor on the Internets ;-) what Comex may default in december

    Comment by Fork_Master_Serg — November 9, 2008 @ 8:18 pm | Reply

  13. Fork, that’s big, I’ll check it out. As for the Spiral Calendar, in the moment I have only a database for SPY/SPX. Will do the same for Gold, that’s a good idea.

    Comment by moontrader — November 10, 2008 @ 4:32 am | Reply

  14. I’ll post later than usual tonight, because I’m off to a wedding (not mine… yet).
    Today I didn’t do any trade because the market opened too high, and it just slid. Today’s action changes my short-term outlook of a rally. And I think we’ll see new lows soon.

    Comment by moontrader — November 10, 2008 @ 4:04 pm | Reply


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