Luna $ Ticks

November 25, 2008

Retracement or New Low?

Filed under: Trading SPX SPY — moontrader @ 1:21 pm

From Friday’s low to today’s high we had quite a rally, but I wouldn’t go long at these levels. I’m writing this post in the middle of the day, and SPX right now is 847.42. Here is an updated date projection also calling for some sort of bottom this week, either a new low for the year or just a retracement.

spx-112508-spiral

There’s a couple of interesting things to notice in the above chart. First, last Friday to today’s rally perfectly aligns with the sharp rally that happened between the 18th and the 19th of September. What happened back then? The short-selling ban. I saw some of the readers commenting that the rally from last Friday looked similar to that September rally. No wonder. Both rallies were produced by the government taking bold actions to try to gain some time while trying to stabilize the financial crisis and avoiding panic.

Second, it aligns with another very important bottom followed by a sharp rally: the bottom on October, 10th.

Please notice that the bottom of last Friday, the 21st, aligns perfectly (tolerance only 2 days) with both bottoms, plus the following tops align perfectly with today’s top (if 868.94 holds, which is likely). The following bottom also aligns between Wednesday (tomorrow) and Friday (the 28th).

Although I’m not sure if we’re going to have a new low or just a retracement, I want you to notice the third important thing:

  • the upleg got larger from F5 to F3, but it got smaller from F3 to the current.
  • the downleg from F5 to F3 got larger.

Therefore, if this is a retracement, the downleg will get smaller, otherwise we’ll have a new low for the year. Now, notice that the downleg from October 14th to 16th almost erased the whole rally from Oct 10th to 14th. And that was a much larger rally. From October 14th to 16th, from top to bottom, SPX slid 178.48 points. The rally from last Friday to today’s top was 124.83.

Just another thing to notice:

  • October 16th low = 865.83
  • Today’s high (so far) = 868.94

To conclude: we might or might not have a new low for the year, but we’ll probably have at least a sharp retracement from today’s high happening in the next couple of trading sessions.

Advertisements

15 Comments »

  1. Thanks for the mid day update.I was eagerly waiting for it.I will keep my shorts then.

    Comment by Moontrader fan — November 25, 2008 @ 1:45 pm | Reply

  2. By the end of the day we should have a better idea if this forecast is working or not.

    Comment by moontrader — November 25, 2008 @ 1:55 pm | Reply

  3. Thanks for restating and mentioning it on the other sites. I enjoy your work quite a bit because its more than just a 2 day time-frame. Appreciate that.

    Comment by etechpartner — November 25, 2008 @ 2:02 pm | Reply

  4. Really appreciate your analysis. It is not easy to put yourself out there making educated decisions on the market direction. But I sure hope your right.

    Comment by Trader Tom — November 25, 2008 @ 2:03 pm | Reply

  5. Thank you for your excellent analysis and your timely updates!

    Having very few astronomic details to add to your post, I simply want to give a word of encouragement to all traders holding shorts at this point. Some, most likely, in red.
    I do see one very important level that we will definitely re-visit shortly: 818-820, maybe even today or tomorrow.
    The amount of bullish opinion flourished in the last 4 days is overloading the senses and might influence hasty decisions. Be careful as with any overload.
    I’m holding hard and wish you all the best.

    And, yes, one more thing, Nov 27 is a New Moon. I don’t know how this dove tails into the moon spiral but it sure could be a good symbol for the lowest point of something.

    Comment by dreamdaily — November 25, 2008 @ 2:18 pm | Reply

  6. If Spy closes below 82.90 it’s a good sign. But if it closes below 81…

    Comment by moontrader — November 25, 2008 @ 2:27 pm | Reply

  7. moon:
    Thanks, I am holding my shorts, too.

    Since I don’t understand cycles, I do have a couple of questions:

    1. Is it true that for a sharp retracement to take place,SPX must close yesterday’s close and below DMA3x3?

    2. What happened to Nov 24-26 dates? Did those dates “get realized” or it was a “computing error” or you just have new bottom dates as 11/26 or 11/28?

    Thanks very much!!!

    Comment by DalalStreetKing — November 25, 2008 @ 2:42 pm | Reply

  8. dreamdaily:

    As if you have an x-ray vision into my portfolio: I hold puts on all major indexes: and yes they are in red;=(( lol.

    Just to be sure, can you please expand on your comment “I do see one very important level that we will definitely re-visit shortly: 818-820, maybe even today or tomorrow.
    The amount of bullish opinion flourished in the last 4 days is overloading the senses and might influence hasty decisions. Be careful as with any overload.
    I’m holding hard and wish you all the best.” ?

    Hasty meaning don’t close out my puts and hold on to them past?

    Yes, I do see 818 on SPX as a first level of support; and then on to 763.

    Comment by DalalStreetKing — November 25, 2008 @ 2:50 pm | Reply

  9. More than likely the IT low is in…plenty of evidence around reagarding MACD bull formations,M Osc, but more than that, its everyone saying “sell the rally”. The pullback will be much shallower than most are expecting…and we will trend higher into the SPX 1000-1100 area.

    Comment by Tom — November 25, 2008 @ 3:03 pm | Reply

  10. Your work is very much appreciated, grazie mille.

    Comment by peterey — November 25, 2008 @ 3:29 pm | Reply

  11. Watch the 750 level in the next few days. Just as the September rally failed and then gapped down past key support @ 1080, I suspect this one will fail at 750.

    Comment by tradingaces — November 25, 2008 @ 3:38 pm | Reply

  12. Thank you for the update, very much appreciated.

    Comment by mb — November 25, 2008 @ 3:41 pm | Reply

  13. my Exxon puts also in red today, although this puppet retreated $0.69. My broker is threatening “forced buy back” of my short shares of Exxon a 2nd time in a week’s time. It appears one cannot easily short Exxon shares directly.

    Comment by not_yet_wipded_out — November 25, 2008 @ 4:38 pm | Reply

  14. Moontrader!!!!
    I just saw your chart for Util short sell–I’m in a good one right now–(D)Dominion, It’s pretty easy to see the Price channel.

    Comment by zee http://z-stock.blogspot.com/ — November 25, 2008 @ 5:52 pm | Reply

  15. Experts on stochastic anyone? I found fascinating fact – recent

    STO on CPC look like a spike where black line is 2x faster vs red

    line. So I decided to check when we had such spikes in the past –

    looks like only 3 in past YTD. Also on CPC itself note green dashed

    trend line was penetrated both times and at the line right now. in

    first case we rallied 2 more days and dropped to retest low in

    second case we continued to drop immediately. What do you guys

    think?

    Comment by Forkoholic Serge — November 25, 2008 @ 6:36 pm | Reply


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: