Luna $ Ticks

December 21, 2008

Watching the Basket

Filed under: Trading SPX SPY — moontrader @ 7:40 pm

This is pretty much a follow up on the two previous posts.

spy-121908

Last week’s top happened on Wednesday, 17th, when SPY reached 92.43, so we have now a pretty clear stoploss: if SPY goes above 92.43 during this week or the week after we should cover our short positions.

That said, the scenario seems to be turning favorable (not confirmed yet) to the bears. In the above chart you can see that Stochastics are pointing to a short-term down movement, while MACD is very close to giving a sell signal. Plus, SPY closed below DMA’s 3×3 and 7×5, but still above DMA 25×5 (near it, though). Tomorrow, Monday, should be very important to our scenario of a sell-off through the end of the year: a close below DMA 25×5 will probably turn MACD negative and pave the way for a more significant fall.

However, remember that we are at the end of the year and volume tends to shrink. But who knows, we might have a surprise, since we had so many throughout the whole year.

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11 Comments »

  1. I generally agree with the analysis … but fwiw … I think that the SPY’s high on Wednesday was 91.69 … at least that’s what stockcharts is showing …

    Comment by Little Fish — December 21, 2008 @ 10:11 pm | Reply

  2. Moon,

    Somehow I feel the juice is very limit anyway.

    Comment by David YZ — December 21, 2008 @ 11:02 pm | Reply

  3. Moon, I have the same conclusion on my blog but my MAs are not DMA, but I have a few trendlines going that point to the same thing. http://www.elitetechfinancial.com

    Comment by Beyond — December 22, 2008 @ 12:39 am | Reply

  4. moon:
    I take it that you’re holding your eggs (the shorts you bot last week) in your basket?
    Is your stop at 92.43?
    Thanks for the update.

    Comment by DalalStreetKing — December 22, 2008 @ 1:00 am | Reply

  5. It’ll be interesting to see what happens for month end close. I took a ROUGH glance at the S&P history and so far in 2008 only 3 of the months have closed up. All the S&P has to do is close over 896 to give 2008 4 ups instead of 3. Many bear markets in S&P history have had only 4 up months but only 3 years; 1937, 1973, and 1974 have had less. 37 & 73 had 3 up months and 74 only had one up…..ouch……that should help us understand the magnitude of the situation.

    In terms of % decline, those periods of 37 and 73/74 experienced comparable declines of the current bear, around 50%-53%. The years following those periods, 38 and 75 saw market increases of over 40+% for the year. So the question is …… should I transfer my 401K balances from fixed income to equities around the next low? Probabilities based on history say YES! The evil speculator’s latest post says wait until we’re much lower sometime next year.

    Comment by RoughMath — December 22, 2008 @ 1:53 am | Reply

  6. “It could go down but then again it could go up” and “expect the unexpected, or not, in this crazy year”.
    Obviously, clarity is in short supply. Is there a call option on obfuscation (or a short on clarity)? Now THAT would be the surest bet ever made.

    Comment by TCcuba — December 22, 2008 @ 2:11 am | Reply

  7. little fish, I use prophetcharts and thinkorswim charts (probably same feed) and they are showing 92.43 as Wednesday’s high.

    David, yes, volume should be very thin this week, but the edge still points down. So, I wouldn’t bet on a significant drop, but I wouldn’t go long as well.

    Dalal, yes, stoploss at 92.43 or Stochastics turning up.

    TCCuba, I don’t understand who you are quoting.

    Comment by moontrader — December 22, 2008 @ 6:34 am | Reply

  8. RoughMath, interesting note. At the moment I don’t feel confidence in putting my money into stocks, unless for a quick trade, absolutely speculative. I just don’t feel this is an investor’s market. As someone mentioned here before, the first suicides in 1929 were people trying to grab a bottom to see their “smart” money evaporate instead of people that bought the top. How low can we go? I don’t know. I prefer to keep the money I make in safety.

    Making money is not as difficult as consolidating it.

    Comment by moontrader — December 22, 2008 @ 9:00 am | Reply

  9. FWIW: Something I saved from http://www.astrocycle.net:

    http://blog.donnaklinenow.com/?p=693

    Comment by Donna — December 22, 2008 @ 12:40 pm | Reply

  10. I closed my shorts and just went long. (1:30pm)
    I bet the market will go up from today or tomorrow till 1/2/09.

    Only if they have trouble to get the left 350b, shorts will have opportunity. Since the MM will drop the market to scare the congress.

    Comment by David YZ — December 22, 2008 @ 1:35 pm | Reply

  11. Not quoting anyone specifically, but this whipsaw market is sure getting irksome. And no doubt a MM manipulated rally tomorrow. Hopefully some clarity along the lines you scouted can take shape as we head into 2009. At least the politicos who spawned our ongoing monetary and fiscal suicide have a vested interest in bad news to encourage panicky acceptance of ther next Trillion dollar stimulus giveaway to be ‘debated’ Jan 6 to say, 15th.

    Comment by TCcuba — December 22, 2008 @ 9:42 pm | Reply


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