Luna $ Ticks

November 18, 2008

Naughty Naughty Market

Filed under: Trading SPX SPY — moontrader @ 7:56 am

Yesterday during the day I wrote a post showing a chart with the probable “path” the market could follow before the drop next week. The “path” called for a top above 92 (SPY) but the market proved to be naughtier than expected: the late sell-off yesterday plus the negative pre-market today (as I write this post, ES is down 16 points) decrease the chances of a rally-before-the-drop. On the other hand, the bottom scenario for next week is more valid than ever. Here is two important charts:

spy-111708

And this one:

tnx-111708

The Treasury Notes chart shows that things are getting closer to a resolution and, judging by the studies, the breakout doesn’t seem to be to the upside.

Today is Tuesday before expiration and there’s a chance of a short term reversal. On the other hand the market seems to be more vulnerable than expected. So, I won’t be greedy and, at some point today, I’ll start opening my short positions.

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7 Comments »

  1. We now have a triple bottom (which doesn’t happen very often) and we have the potential of a larger bullish wedge developing. is it realistic view?

    Comment by krach — November 18, 2008 @ 9:57 am | Reply

  2. moontrader…………the pattern I was following was a possible head and shoulder on the daily. As you know when you wait for a specific pattern what comes out is another one. If we don’ t make two up bars here it means that we’re entering a descending wedge which is a bullish pattern coming after a drop of more than one year and which means that your time window for the bottom is very likely to me. The bottom pointing to a big corrective rally of a few months,IMO.

    Comment by giorgio — November 18, 2008 @ 10:16 am | Reply

  3. Giorgio, sono d’accordissimo.
    Krach, triple bottoms don’t hold long. But the bullish wedge is realistic. As Giorgio said, you have to wait for a pattern to fully develop instead of anticipating it (or even trading it).

    Comment by moontrader — November 18, 2008 @ 1:23 pm | Reply

  4. instead of a triple bottom looks more like a decending triangle to me

    Comment by jigsaw — November 18, 2008 @ 5:21 pm | Reply

  5. I’m expecting the market to go down from where we are today (like moontrader) until we come to some sort of intermediate to long-term bottom.

    In this market, I wouldn’t put much stock in a triple bottom or bullish wedge formation. I believe the market will take you opposite of the direction such simplistic formations indicate, right now. It’s almost too obvious to believe and follow.

    Comment by Aly Somji — November 18, 2008 @ 5:57 pm | Reply

  6. Hey Aly, yes, I agree with you and I’m sticking to my scenario of some sort of bottom next week. TNX did broke the support trendline and the market came down most of the day, recovering in the last hour.

    Comment by moontrader — November 18, 2008 @ 6:09 pm | Reply

  7. I’m enjoying your blog.

    I’m also looking forward to your analysis after today’s action. A move to 920 is looking much more possible.

    Comment by Susannah — November 18, 2008 @ 6:15 pm | Reply


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