Luna $ Ticks

November 11, 2008

Back from the Grave

Filed under: Trading SPX SPY — moontrader @ 1:24 pm

Two weeks ago I showed a chart projecting a top last week between Thursday and Friday, but the top occurred on Tuesday. Although I missed the date, I nailed the short-short-term uptrend. Last Friday, during the day, I draw another chart with another date projection which was nothing else than the following bottoms in the F5, F7, F9 and F11 series. However, after I draw the chart, at the end of that day, SPY jumped up, I understood that as a sign of strength in the short-term and thus changed my outlook, archiving the chart. But life is full of surprises and we have to be opened to them, especially with markets. Yesterday was a key day in my analysis because it changed the short-term outlook. So, I decided to bring the chart back from the grave. Here it is (as you can see, there’s no Monday bar in it, and Friday’s bar is not complete: SPY closed at the high of that day):


I have said in a couple of posts before – well before, in the past – that the market tends to “clone” itself during reversals, imitating some pattern seen before in a different scale. You can also call this “fractals.” In this study, I’m trying to show that the market is cloning itself in terms of time, through very short cycles of trends. So, the top seen last week was the beginning of a short down cycle, which would culminate – as noted in the chart above – sometime during this week, between Monday and Thursday. The last time I posted a chart, I didn’t include the tolerance of 3 days (suggested by Chris Carolan), which is included here, and that gives us the time window between yesterday, the 10th, and Thursday, the 13th.

Before you ask, the tolerance is calculated to each individual date projected from each series, and the dates in common will be the time window:

11/10/08 +/- 3 days = 11/07/08 through 11/13/08

11/12/08 +/- 3 days = 11/09/08 through 11/15/08

The projections have in common the dates between 11/09/08 through 11/13/08. The 9th is Sunday, so we have a window between the 10th, Monday, and the 13th, Thursday. This window if for a bottom. I don’t want to go bold again, but the projection means that we’ll have some sort of bottom in this time window. It can be below Oct 10th, or it can be above it. My feeling is that if we go below it, then we’re going deep down.

Reader Tralee reminded me that this coming Thursday is a full moon, which would add a certain romantic touch to the projection. This year we had 2 important reversals during full moons: January 22nd and May 19th. That’s not a coincidence. Chris Carolan research mentions that the human being has a natural biological day equivalent to a lunar day, not the solar. So, he suggested that using lunar periods to measure cycles in the stock market would return more precise results. For those interested in reading more about his study, I recommend his book: Spiral Calendar. It’s out of print but you can get in on eBay or Amazon (used) and it’s a bargain (I got my copy for 5 bucks plus shipping). However, I don’t recommend the technique he presents in the book.



  1. With 2 days left for the bottom to occur, and assuming we go down, how far down can it go in this span, having closed today around 899? Do you have any targets? Also,since you missed the top by 2days, can the bottom be off too? But since full moon is on Thu, I guess the chances are you will hit the low right on target. Is this THE low for a few months or are we range bound?

    Comment by bullnbear87 — November 11, 2008 @ 4:57 pm | Reply

  2. Hi Moon,

    Technically it seems SPX should go down, but somehow I feel bull will make sudden attack and bear will be squeezed.

    Please go over today’s market, and maybe some new charts.

    Comment by David YZ — November 11, 2008 @ 7:37 pm | Reply

  3. I have been reading your site for awhile and I am impressed. Any estimate on how low we should go if we break the 10/10 lows?

    Comment by John H — November 11, 2008 @ 9:01 pm | Reply

  4. David, you might be right, we might have a new bear squeeze in the next couple of days. Or not. The thing is, I don’t see – yet – strength in this market to react from current levels. It looks more of a consolidation before new lows.

    John, thanks for dropping by and welcome. If we go below 830, we could easily reach 750, which is 2002 bottom. Another target could be 620.

    Bullnbear, last week I didn’t incorporate the tolerance, which I did this time. According to this analysis, we’re already inside that window, so yesterday could have been a bottom as well. Usually the first part of huge corrections end in capitulation, but maybe this time it’s not going to happen. I’ve been talking to a lot of long-term investors and there’s a lot of tension towards their portfolio managers. Clients are constantly asking to get out of the market, while managers would convince them of the contrary. The market will fall more, some will drop it, others will stay on the boat. There’s a lot of doubt whether to get out or stay, but overall there seems to be no improvement in the investors confidence to return to the market. No money flow. So, looks like the market is behaving in a different way from a “regular” crash.

    Comment by moontrader — November 12, 2008 @ 7:00 am | Reply

  5. moon,

    Good Morning!
    It seems you are in the right direction again. The market really wants to go lower.
    I will hold my shorts and puts, since I believe the risk can be managed.

    Comment by David YZ — November 12, 2008 @ 9:15 am | Reply

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