The Sunny Side of the Street
TUESDAY
NIGHT - August 5, 2003
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)
Figure 1a: INDU Daily chart
The Dow opened at 9185 and simply retraced yesterday's steps by going right back down to close at 9036 (almost yesterday's low).
Even though it seemed like a strong down day, it still qualifies as sideways--it's still in the yellow box.
The Dow didn't drop below the breaking point, so I'm still on the sidelines, waiting for the Attractor to be broken.
Again, until the Dow breaks 9340 on the upside or 8982 on the bottom, I have no interest in playing with this chart. When we get to the intraday QQQ the message is slightly different.
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Figure 2a: QQQ Daily
The daily QQQ broke the lower Attractor today on an intraday basis. If trading the daily chart, meaning you get to see the price only at the end of the day when you come home from your day job, then tomorrow you would be setting a stop entry for the QQQ to drop below today's low of 30.05.
If you were watching it intraday, but trading from the daily chart, you could have gotten short at the 30.79 Attractor mentioned in last night's commentary.
Figure 2b: QQQ 15 minute intraday
On the intraday chart there were plenty of choices to make to pick up fractions of points here and there, or better yet, if you are a follower of my Sunny_Dynamic_Average then you could have gotten short at the red arrow in Figure 2b for a single lovely trade.
Personally, I played with it today, getting in and out four times, (3 shorts and one long) losing money only on the long play and capturing profits on the shorts.
On the daily chart it looks like the QQQ will go on down to 29.32 tomorrow to meet up with the next Attractor. That should take the RSI below the 40 level and into oversold territory from whence it can then take a bounce.
Figure 3: SPY daily
The SPY is playing the same sideways technicality as the other charts, with the low today touching the lower Sunny_Band. And, in fact, price pushed the band a bit downward today.
Who knows? Tomorrow could bounce up from that level and continue on in the sideways play, or it could start a new recoil downwards. Be ready for either case, with stops above and below the market to stop yourself in.
Figure 4: EMini daily
The EMini is playing the same game as the SPY, as it should be. The range in the EMini is from 966 to 1011, and the Sunny_Bands continue to move straight sideways.
Watch carefully for the 4-wave to begin to reveal its end when the bands begin to show a direction. It could be a couple more weeks before the turn, so don't get impatient.
Figure 5a: EuroDollar Daily - Sunday night commentary only
The current signal on the EuroDollar model is still short, but now at last we have the breakthrough we have been waiting for to confirm the signal.
The ED dropped below 98.88 on 7/31, which was the time to actually believe the short signal and make a move.
The next Attractor is now down at 98.7, which could be a nice profit taking opportunity. Why? Because the RSI is so low that I would expect a bounce when that level is tested.
Stay sharp and on your toes. Moves can reverse on a dime, anytime. Let the market speak to you. If the market is going down, by golly ignore my commentary from the night before and know that the market is going down.
RULES OF THUMB:
0. I keep the chart in Figure 1a on each day's commentary simply to illustrate how much in tandem the 4 indexes I watch actually are. For this reason, I don't always comment on every index. Analysis of one speaks highly for the same analysis for each of the other indexes.
1. When price is pushing the upper Sunny_Bands upward and then eases off and moves back toward the midline, it's time to take profits. If it starts moving up and pushing on the Sunny_Bands again, it's time to get back in. Likewise, if the market is pushing down on the lower Sunny_Band and eases off to move back to the midline, it's time to take profits from the short play.
2. Divergence of the RSI and price is another good time to take profits and wait for a breakout of price before taking a position.
3. When the exchange puts in curbs or trading halts on a large move down, it usually (not always) stops the downward motion. After the market reopens is a good time to take profits from your short position.
4. The market can't go nowhere forever. Eventually, who knows how long it will be, there will have to be a breakout-- one direction or the other.
5. This commentary is for educational purposes only, and is meant only to teach readers about my indicators, other technical indicators, and how I read them.
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While it may be true that a picture is worth a thousand words, it is definitely not true that a picture deserves a thousand words.