Sunday July 18, 2021
VantagePoint ai Prediction for Tomorrow
VP clearly shows you the anticipated direction and magnitude of tomorrow’s market with the gray bar on the right of the chart.
One can use any symbol; I trade the EMini S&P.
Wait til you take a gander at this one! VP projects the Dow moving down significantly on Monday! Close to 34,350! That's another 300 points down. Not a crash, but certainly a correction. That would put the Dow at the DMA and at an Attractor lying at 34,441. Typically price bounces off the DMA in a bull market, but not always. If it doesn't it will surely drop to the lower-inner band which sits at 33,973. And that after breaking the 35,000 barrier!
Of course, the best thing is to run VP every afternoon, not just once a week for this newsletter.
Last week VP indicated that the Dow would move slightly upward on Monday, which it did. Subsequent predictions (which I saw each week day by running VP daily) predicted the break of 35,000 (and indeed it did break that key level) and now it is signalling a strong downward move for Monday.
All three VP MAVs are pointing downward on the Dow, but the long-term MAV and the medium-term MAV are still above the zero-line. That could be encouraging for the remainder of the week to experience a recovery from the imminent down-draught. However, with the short-term average below zero, we can expect the down prediction to come true.
SunnyBands Implications
Dow Jones
S&P 500
No more mixed messages when analyzing the NQ, ES and INDU this weekend. All three (NQ, ES and INDU) are showing sell signals.
Last week I said that I wondered whether the other two would continue on up with the Dow following along to higher highs, or if the Dow would pull the other two indices down with it. Now we know. The Dow pulled the others down, and they are all three signalling short.
The DMA (DynamicMovingAverage) is in sell position, having alerted on Friday for the Dow and on 7/8/21 for the ES, while on the NQ the alert was also on 7/8/21. The DMA_H on RadarScreen for the Nasdaq 100 shows about half the stocks as bullish, though many of them are turning down (/\), and half bearish but showing the \/ symbol, which means bearish but turning up.
The Dow was steadily down for most of the day, with a brief respite from 7:30a - 10:30a PST (my time). After that little sideways break, it was steadily downward. The ES did the same pattern, but the NQ actually went up during the period that the other two went sideways.
Since this is a weekly missive, we miss the daily changes to the indicators. Send me an email if you are interested in daily updates. They can be sent directly to you by email from my TradeStation program. Or better yet, order SunnyBands and DMA_H for your own computer. Of course, like all my products, they work on intraday charts just a well. All symbols, all timeframes.
The ES continues to outperform the Dow, but has actually touched the DMA in its retreat Friday. I drew a linear regression trendline on this chart, in gold. Currently price is just below the trendline, but it still looks strong.
The Dow has an overhead Attractor right at 35,000, which is a strong psychological turning point. Price touched it Monday thru Wednesday but retreated each time followed by a strong down day on Friday. The next Attractor under current price lies at 34,127 and looks to be good support. The DMA is at 34,415-ish and could hold the Dow without going deeper.
Fibonacci Retracements and Extensions
The 50-day MAV is below the DMA, is below the trendline, is also below the Fibonacci retracement and is below the lower-inner SunnyBand. Actually, it is right on top of the lower-outer SunnyBand. That's significant! To me it says that it wouldn't be surprising for the ES to drop on down to that level, which lies at 4,211. The ES is currently at 4,318, thus if it happens will be a drop of 107 points. The corresponding 50-day MAV on the Dow lies at 34,400-ish which is "only" about 200 points down.
The DMA_H called for shorts on 7/8/21 with its stop hit 2 days later, only to signal shorts again the day after. It is still in a sell alert. I have an indicator I call "RedLiteGreenLite" which uses my DMA smoothing algorithm in RadarScreen to show me short-term, medium-term and long-term views of the symbols. Long-term, for this exercise, is 10 periods while the other two are 2- and 5-period DMAs.
To get a long-term perspective, let's look at the comparison of long-term signals, medium-term and short-term.
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Stocks
In this section, I'll take a peek at a few of my favorite stocks. Like Cathy Wood, of Ark Invest, I like disruptive stocks, those that promise radical changes to the way we live, like TSLA. I also trade what I know. I use Amazon in real life, so I trade AMZN. I use Verizon as my phone carrier, so I trade VZ. I use Microsoft software so I trade MSFT and so on. Let's first look at the RadarScreen view of a few stocks:
The chart above is my main research tool. The indicators are not sorted in this view to allow you to see the mixed bag of directions we currently have. This is typical of market tops, and for this reason I am cautious.
If I sort on PHW from highest to lowest tells me which stocks are the most tradable. A stock that just moves slowly from A to B is an investment, not a tradable. I'm looking for wide swings from which to profit, not just buy-and-hold.
And if you put your instruments on the same price scale on your chart, you will learn a lot about where the money is.
To me trading is not about being right! There are lots of advisors and stock pickers out there who boast about getting MSFT at $32 and holding it for gazillions in profit. My trading style is to specialize in a few things and be good at them. The stock pickers never tell you how many they picked, only the few that were the big winners.
The columns just past the middle of the RadarScreen window show a colorful area that tells me at a glance the configuration of my DMA_H on all the stocks in this portfolio. (This indicator is called DMA_R_H, meaning DynamicMovingAverage RadarScreen Histogram.) Green Bearish \/ means the stock has been bearish but is now turning up. Purple \\ means primarily bearish. (These are the colors in the DMA_H and SunnyBands DMA. So, "purple" means Purple is on top in the DMA.) Gold Bullish // means the stock is moving upward. Red Bullish /\ means the stock has been going up but has now turned downward.
Of course, you can sort on any or several of these columns. Color coding things makes it easy for me to spot opportunities at a glance.
From this look (above) at the RadarScreen (like a spreadsheet) I can sort by SDMA, which shows me all the bullish stocks on top with Dir showing me which are moving aggressively upward and which have been moving up but have now turned down. Call me, I'll explain it. 760-908-3070 PST.
Click Here to see and listen to the DMA_H Live with BingTicks!
GOOGL and MSFT are still closely tracking with their trajectories, if not their actual prices. It is easy to see that they are extended into their 200% Fibonacci extensions.
On the weekly chart below is my SmoothedRSI, along with the standard RSI, which is entirely too jaggy for me to use as a predictor. My RSI shows me that these charts are in over-bought territory. The mistake many new technical analysts make is to think that the market will turn around as soon as the RSI becomes overbought. The fact is, however, that price can stay in overbought territory for a long time while price just continues to go on up.
AMZN looks to me like it has more room to the upside. The yellow, sideways channel has been slightly breached, which could portend upward movement, but at the same time last week's price dropped back within the box. My DMA_H has signalled a short on the weekly chart, as you can see below. On the daily chart the DMA_H has been bearish since 7/13/21. Also, not shown here, there is a strong Attractor on the daily chart at 3,546 which could easily stop any further downward movement.
Consider getting the DMA_H for yourself. It's a great trading tool!
Send me a note telling me what stock you would like to see analyzed next week.
Gold
Gold gave us a short signal on 5/26/21 and then long on 7/2/21 per the DMA_H. Price touched the upper-inner SunnyBand Thursday and the retreated slightly down to touch the DMA lines. I am anticipating further move to the upside in Gold over the next several weeks heading for the next Attractor upward which lies at 1,860. Current price is 1,815. Inflation numbers came in higher than expected on Friday which will likely influence the price of Gold.
Bonds
Bonds are continuing their march upward as the upward attractor lies at 164-15/32, with current price at 156-4/32. The Attractor that was formed in June of 2020 and confirmed in November of that year is at 167-11/32. I'm thinking that price will get to that level, but not without some more backing and forthing.
IMPORTANT: Nothing in this newsletter is an offer to buy or sell securities of any type, nor is it advice to make any financial decisions. You are in charge of your assets and only you know your risk tolerance and how much you can afford to lose. Never invest/trade with money you cannot afford to lose. This information is intended as educational only.
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Products
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Consulting/Mentoring - There is nothing that makes me happier than my students turning into great, profitable traders. I love to help new traders, and intermediate traders who are in a slump.
"Thanks very much; I do like hearing from you [, Sunny]. Thanks to SunnyBands I now have a net worth above $1.25 Million." -Don T. [Editor's note: Don started 3 years ago with a $25,000 account. And, he told me yesterday that his account is now well over $2 Million.]
SunnyBands - SunnyBands are a extension of my DMA. The two lines above and two lines below the purple and gold DMA alert me to where the market is going. They are constructed from ATR bands on either side of the DMA.
DMA_H - Sunny"s DynamicMovingAverage in histogram format, using sophisticated math to smooth out the whipsaws.
Of course, my indicators work on any symbol, any time frame. In my own trading I use 1-min and 5-min charts of the ES.
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