Monday 9/15/08. SPY @ 120.00. Today, the market got hammered, with the Dow selling off over 500 points and the S&P 500 off almost 5%. A chart of the S&P 500 Depository Receipts (SPY) indicates why the trend is your friend and bottom-fishing is an expensive sport (click on the chart to enlarge it).
The market peaked at around 144 in May, then issued a sell signal at 137 and change when the 20 day trailing low was punctured to the downside. This short trade was profitably closed when the 20 day high was taken out in August at 129, an 8 point short sale.
Had you reversed (as you should), you would have been stopped out at 126 when the 20 day low was violated.
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