Luna $ Ticks

December 18, 2008

Put Your Eggs in a Basket…

Filed under: Trading SPX SPY — moontrader @ 8:34 pm

And watch the basket. This is a quote by Warren Buffett.

Well, the first part I did (notice that he doesn’t say “put all your eggs in a basket…”). I loaded my basket with SPY puts (January, 80 and 75), S&P Ultrashort (SDS) and I took one of the ideas from Tim, shorting Abercrombie (ANF) because the chart seemed as attractive as Mr. Knight’s rationale.

Now I have to watch the basket so it won’t fall and screw my eggs:

spx-121808

A couple of words on the above chart, which is not entirely self-explained. First of all, there’s no clear confirmation of a short-term reversal according to the criteria I use: today’s close was above the three DMA’s (3×3, 7×5 and 25×5), Stochastics is giving a sell signal but still in positive territory, and MACD is giving a buy signal and in full positive territory (indicator line and signal). So, why am I shorting? As I said in yesterday’s post, I would be anticipating my own indicators based on spiral dates projected shown in this chart, which makes the case of a top between the 16th and the 19th. Yesterday, 17th, I decided to open a little position. Today, watching the 5 min chart, I felt comfortable enough to increase my position and, as I did it, I soon saw some profits. The drop dragged SPX to the convergence between DMA 3×3 and 7×5 and close to DMA 25×5. This kind of movement, along with Stochastics and MACD positive, gives me the sense of weakness. It’s ok if tomorrow we go above yesterday’s high (918.5), but it won’t be ok if we go above that level anytime next week.

At this point my basket is loaded and doing fine. Next week will be more important than tomorrow for my outlook and edge.

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8 Comments »

  1. moon:
    I am with you on this one. I have various puts, SDS, and that scary SRS.

    I like your analysis – although I still have learned the cycles. You knowing itmakes you understand the importance of dates; like this one: “It’s ok if tomorrow we go above yesterday’s high (918.5), but it won’t be ok if we go above that level anytime next week.”

    Thanks.

    Comment by DalalStreetKing — December 18, 2008 @ 11:25 pm | Reply

  2. You are on a roll Moontrader, keep it up bro. Great post.

    Comment by toad37 — December 19, 2008 @ 12:13 am | Reply

  3. this time moon, we’re on opposite forecasts. I’ ve got a top on 29th Nov. Market not healthy for sure and artificially substained so that a good drop is behind the corner imo, but not yet ready. They have to suck in some more people as for what I can imagine.

    Comment by giorgio — December 19, 2008 @ 2:50 pm | Reply

  4. Moon,
    I still have NO IDEA how you estimate time. I’ve looked at your charts and have seen the F3, F5, etc. but I still have no idea. Like…if a new low occurs as you estimate, how long will it take to rise to its peak?

    I sold off my ALL my longs over the last several days.

    A few obserations…..
    – The SPX peaked (DTOP) on the 17th at 24% (1st) up, off the 740 low.

    – The RUT, which I like better because it moves more, peaked TODAY (right on the $$ Moon) at 34% (2nd) up off the 371 low, same day as the SPX. Maybe your lunar radar is more aligned with the RUT.

    I actually held some 2X RUT: UWM since the low and today it was up around 70+%……it pays to work the lows.

    I switched half way to the 3X RUT: TNA, but had I known about the product in Nov at the low, I would have been up around 107%. And the product has good volume and price integrity. 34*3=102

    So now you know…..when you say there is going to be a new low, you have my attention .

    New Low=Big Money.

    Comment by RoughMath — December 19, 2008 @ 7:25 pm | Reply

  5. I have been a avid reader of your postings for some time and still learning the different cycles. So, i paper trade them and have done quite well and the last recommends of jan puts 75/80 are amazing, bought 75’s@.57, now .80 and 80’s@1.23, now 1.45. Keep up the great work and enjoy the new year with the new Mr’s.

    Comment by jody — December 20, 2008 @ 12:36 pm | Reply

  6. Be right, sit tight.

    Comment by TraderTamas — December 20, 2008 @ 3:13 pm | Reply

  7. I think that hammer on the VIX on friday, might turn out to mean something, next couple of days.

    Comment by zee http://zstock7.com — December 21, 2008 @ 5:44 pm | Reply

  8. RoughMath,

    F3, F5, etc are different time periods calculated by Christopher Carolan in his Spiral Calendar. As I said before, I use his research as a starting point to my own study in time cycles. If you want to know more, I recommend that you buy Chris Carolan’s book “Spiral Calendar.” It’s out of print but you can find it on Amazon Used or eBay.

    Comment by moontrader — December 21, 2008 @ 7:47 pm | Reply


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