Luna $ Ticks

November 21, 2008

SPX Targets

Filed under: Trading SPX SPY — moontrader @ 9:33 am

Today the market is opening high, and this for me is just another short opportunity. It looks like we’re heading towards a bottom sometime next week and I’ll be positioned for that. In the meantime, I’m trying to calculate the target for the S&P 500 and I have a couple of candidates.

Here’s what I’m doing:

spx-turning-points-112108

On the above chart you can see significant turning points and their respective value. I tried to combine tops with bottoms with tops to project targets in 5 different ways:

  1. Contracted Fibonacci: x .618
  2. 1 to 1
  3. Expanded Fibonacci: x 1.618
  4. X-Expanded Fibonacci: x 2.382
  5. XX-Expanded Fibonacci: x 2.618

The combinations you can see in this table:

spx-targets-112108

I colored the target clusters. The yellow highlights however mean possible targets with no clusters.

These are the targets I got to:

  • 750 (we hit that yesterday);
  • 680;
  • 610;
  • 540.

Since I believe the bottom will be next week, the 750 might be – in theory – discarded. Again, we need to see a sharp drop between today (after this sort of rally at the opening) and Monday towards these numbers, otherwise the scenario is not valid.

UPDATE: As suggested here’s the poll:

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22 Comments »

  1. Moon,

    What happens? I am waiting for your next post.

    Comment by Wanessa — November 21, 2008 @ 4:44 pm | Reply

  2. Moon,

    Very good job. Have a good weekend.

    Comment by David YZ — November 21, 2008 @ 4:45 pm | Reply

  3. Man, 680 from here would be a very profitable drop for me!

    Comment by tradertom — November 21, 2008 @ 4:47 pm | Reply

  4. it’s interesting if this short rally ends up on monday…

    Comment by krach — November 21, 2008 @ 4:50 pm | Reply

  5. looks like we may test the break line, looks like a great short to me

    Comment by jigsaw — November 21, 2008 @ 4:54 pm | Reply

  6. we need to see a sharp drop between today (after this sort of rally at the opening) and Monday towards these numbers

    One of the assumptions have failed. Now, we have another scenario?

    Comment by Wanessa — November 21, 2008 @ 5:55 pm | Reply

  7. Hey Wanessa, I’m gonna write a post tomorrow. Here the preview: the scenario hasn’t changed, today’s close was still below Wednesday low, all the indicators are down, trend remains down. This sort of rally is normal before a drop, it’s more like a reflective reaction. I know, it’s a squeeze, but nothing to worry about… at least so far. Market has been choppy, just hold it tight. As I said before, stay small, stay cool.

    Comment by moontrader — November 21, 2008 @ 6:36 pm | Reply

  8. I vote for S&P 680 and I’ll share why……
    If I use the rough (very) Fib consecutive number approach here’s what I get.

    1550, 1440, 1300, 1050, 660

    The Consecutive differences between the numbers (the highs) add to the summ of the previous two.

    110, 140, 250, 390

    Around 660 or 680 should be the bottom, I don’t know when….but I will stay short until then….
    It can’t go any lower because 660-(250+390)=120 and I think that is just not realistic.

    Comment by RoughMath — November 21, 2008 @ 8:14 pm | Reply

  9. RoughMath, very interesting approach to the series. Someone on CNBC is also talking about 660. Thanks for sharing that.

    Comment by moontrader — November 21, 2008 @ 8:30 pm | Reply

  10. why is the market so keen to go down … is there a magnet down south. I think the US is doomed

    Comment by Sand — November 21, 2008 @ 8:46 pm | Reply

  11. I’M sorry to say that my charts indicate Fri. was the last day of the bear market
    See my chart below. I’M not crazy…. really…it does work.

    ..http://www.screencast.com/users/heccis/folders/Jing/media/c8617771-5e48-4a9f-b208-cfff2047f73c.

    Comment by Heccis — November 21, 2008 @ 10:05 pm | Reply

  12. Thanks for your valuable insights. Could the low have been today? This weekly SPX chart looks like 5 complete waves down, and right to a great low spot for now…and would almost fit in perfectly with your low now:

    Comment by Tom — November 21, 2008 @ 10:15 pm | Reply

  13. Fri. was the last day of the bear market….
    That would be wonderful! However, as we’ve seen before no bottom has held as of yet. And because of this fact, I suspect the Big$$ is going to push it down there for a re-test…probably more than once, just to be sure.

    Back to the rough math though….now that you have me thinking about it(and I shouldn’t). My numbers are based on tops, so 660 would be the last top of the dome in the Bear market. Because its the last top, the actual bottom should be lower……..how low? Lets say what 38.2% of the S&P top? 1550*.38.2=592…..Using this approach approx. 592 would be the bottom with 660 as the top before the re-test….10% vol jumps are reasonable, they’re happening now.

    And at 592 I think there would be total disgust from investors and total panic buying from traders, which I think would mark a bottom. Do we have that now?

    The time frame is much more difficult. As we approach lower lows the dome width becomes narrower and narrower. I would like it to happen soon, but until investors can see a light at the end of this crisis, the only buyers will be bears covering so they can re-short….I know that’s what I’m doing.

    Moontrader, I like your stuff but it make me think too much.

    Happy Holidays.

    Comment by RoughMath — November 22, 2008 @ 12:31 am | Reply

  14. Moon,

    “the 750 might be – in theory – discarded”. 750 have to be considered again, right? If we are gonna have a sell-off Monday/Tuesday, than that would be the “retest’ level? Sorry for my english

    Comment by Wanessa — November 22, 2008 @ 7:42 am | Reply

  15. If you look at a long term chart of all s&p 500 records you will see that similar to the 70’s meltdown the market will touch the long term uptrend before there is a bottom this is around the 540 to 600 level, furthermore, this level is close to the 61.8% retacement level (604) of the entire run from the 1930’s to present. Another strong indication is that the 377 weekly moving average is around 638s (a little break to the downside would put it right around 600’s.

    I think Roughmath is correct in that this level will make everybody giveup and say no mas.

    Comment by TFYISIRCH — November 22, 2008 @ 7:52 am | Reply

  16. sorry i meant the 1597 weekly simple moving average and 377 monthly moving average.

    Comment by TFYISIRCH — November 22, 2008 @ 7:54 am | Reply

  17. Moon,

    Are you of the opinion that the low to be put in the coming week is THE low for the year, or THE low for the bear market? If I recall you had one in October and a month later you have another date.

    Comment by bullnbear87 — November 22, 2008 @ 8:08 am | Reply

  18. Heccis, what’s the tolerance for your cycle studies? Minus or plus how many days?

    Comment by moontrader — November 22, 2008 @ 8:40 am | Reply

  19. RoughMath, I agree with you, too soon to call a bottom. I’ve tried it before, I’m not doing it anymore. Btw, thinking is good.

    Comment by moontrader — November 22, 2008 @ 8:42 am | Reply

  20. Bullnbear, I’m talking about the low of the year. This bear market is far from over. The charts I showed back in October and early November didn’t cover the whole correction from last year’s top with a precise pattern as this cycle chart I showed on Nov. 14th post:

    And I also believe we need some sort of panic to happen before a bottom can be called.

    Comment by moontrader — November 22, 2008 @ 8:48 am | Reply

  21. moontrader…sorry I could not answer. I took sick after post. I like your thought on your charts. Will soon get in touch when I recoop. Hector
    Where is your Email address … Im new at these blogs

    Comment by Hector Cisneros — December 26, 2008 @ 6:28 pm | Reply


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