Luna $ Ticks

November 19, 2008

Black Something

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

Today was a pretty weird day. It started out with what seemed to be a correction of yesterday’s late day rally, but it slowly turned into a clear impulsive wave down. For most of the day I didn’t know what to do, and when that happens I just don’t do anything. Towards the end, however, it seemed that it would prepare another whipsaw for the bears like yesterday, so I bought a tiny November Call position. It didn’t take long for me to understand that the position wouldn’t make any lottery money (although for 10 or 15 minutes it was quite profitable): the rally soon fizzled giving place to a new low for the year. But that happened at the very end of the day, and from those levels the market didn’t react. At this point everything was clear: I closed my tiny long position and quickly opened a short one. I left some ammunition in case we open higher tomorrow, but I’m not sure the market will give this sort chance to those that didn’t grab some puts today.

Here two charts I think are useful:

spy-111908

tnx-111908

Just a final word about the date projected for next week. I guess we all have the feeling that things are converging towards some sort of big drop in the near future. Maybe tomorrow, maybe Friday, maybe Monday. I don’t know when, but it looks like we’re going to have a black something. The big drop doesn’t need to be next week, it can be Friday, with the low and reversal next week. For those already short and conservative, if a big drop do come tomorrow or Friday, you don’t need to wait until Monday to see what will happen: scale down your position. Don’t need to grab the whole world at once.

Good trade to all of you.

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9 Comments »

  1. I can just see them Bulls standin’ in the pasture right now waitin’ for the fence to drop ; Lickin’ them chops…

    Comment by Stksgt — November 19, 2008 @ 7:43 pm | Reply

  2. nice work on the charts, I enjoy the site, check every day I trade

    Comment by TJ — November 19, 2008 @ 8:02 pm | Reply

  3. In case the market does go down in the next two days of this week,how will you interpret the window of next week low? In other words, will it continue down till your window closes or how will you know the low has occurred and it is time to go long? All rallies these days have a shelf life of a maximum one day and hence dont want to get trapped on going long on a day of reversal. SO is there any other signal you will use to suggest the worst is in.

    Comment by bullnbear87 — November 19, 2008 @ 8:21 pm | Reply

  4. I agree completely. I guess I could have gone short this morning or even EOD today because I don’t think the market will reverse until we experience a high volume selling climax… but I was too busy with school stuff.

    I’d like to see a nice end of year rally if the market crashes… but who knows!?

    Comment by tradertom — November 19, 2008 @ 10:41 pm | Reply

  5. moon:

    If the markets continue to drop like today for the next day or two, could the “reversal” that’s supposed to occur Nov 24-26 be a reversal in the opposite direction – up?

    May be I am asking too much from the “cycles”?

    Comment by DalalStreetKing — November 20, 2008 @ 12:55 am | Reply

  6. Bullnbear, the window next week is when a bottom would occur which implies in a reversal.

    Dalal, what do you mean, that instead of a bottom we have a top? According to the chart I showed a couple of days ago, that’s not very probable.

    Comment by moontrader — November 20, 2008 @ 9:00 am | Reply

  7. Dear Moon,

    What is your “Black Something” percentage-wise? Possibly as huge as hitting a retracement level a notch down? Like S&P 725?

    Comment by Christian — November 20, 2008 @ 2:10 pm | Reply

  8. Christian, it’s more sort of a big drop in one day (8 or 10%, or even more) with sentiment hitting very low levels, like a spike on VIX maybe above 100.

    Comment by moontrader — November 20, 2008 @ 2:45 pm | Reply

  9. Thanks Moon!

    Comment by Christian — November 20, 2008 @ 3:01 pm | Reply


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