Sunday night August 22, 2021
What the Pundits Are Saying
VantagePoint ai Prediction for Tomorrow
VP clearly projects the anticipated direction and magnitude of tomorrow’s market. One can use any symbol; I trade the EMini S&P short-term and select stocks for my long-term portfolio.
My read of this chart is: Looks like we are going exploring tomorrow. VP shows higher prices than yesterday with the predicted low below yesterday's close but not below yesterday's low. No new highs predicted yet. Note that the horizontal bar at the bottom of the chart has turned green, signalling bullishness.
The short-term MAV has turned up and crossed the medium-term MAV but all three are below the zero-line. Short term looks promising but not so for the long-term yet.
While this prediction is good for tomorrow, wouldn't you want to know every day of the week? Of course, the best thing is to run VP every afternoon, not just on Sunday nights, like I do for this newsletter.
VP (VantagePoint ai Software) suggests that tomorrow should explore a bit higher price and lower prices as well.
SunnyBands Implications
Dow Jones
Like the S&P, below, the Dow had a few down days this week, and I can't believe I'm saying this, only about 1,000 points down. In the olden days when I was a young trader, 1,000 points was all there was. The Dow in January 1981 had a high of 1,013. On a semi-log scale it just looks like we have been meandering lazily upward all the time while on a linear scale it looks like we are headed for another crash. Might think about using semi-log scale. Give me a call if you want me to explain the difference.
All else aside, the Dow was up 225 points Friday as folks still continued to buy dips. My guess for this coming week is 35,574. Why do I say "guess"? Because no one knows what the markets will do tomorrow; at best we are all guessing. The trick is to stay nimble and go where the market tells you. As you know, I follow by trading intraday, not daily charts.
Once upon a time I collected yearly data for the price of a new, vanilla, Ford since 1900. I then divided the Dow by the price of a new car and the chart was a straight line. To me that said that, adjusted for inflation, we are just barely keeping up.
Last week I said that the market "up, up and away" and yet we had down days. How do I explain that? Well, on a weekly basis we are still moving upward with the Dow slowing but not capitulating, as of yet. The Dow is still above its 21-day MAV on the weekly chart. Nothing says that it won't break below it tomorrow, especially because my DMA_H is still showing red bars.
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I am still predicting Dow 50,000 but not just yet. We still have some downs and ups to explore before we get there.
S&P 500 (ES)
On a daily basis, the DMA (DynamicMovingAverage) is still in a long position, with the gold line on top of the purple, having alerted on 7/20/21. The Dow is now below the upper-outer SunnyBand but above the purple/gold DMA lines. On a closing basis the ES did not break the DMA last week, which at this point still signals strength. The caveat to that is the DMA is once again showing red bars. You will see that on my enlarged inset below.
The ES is no longer above the upper-outer SunnyBand, showing strength but rather it is below the upper-inner band showing strength. What? Yes, I said showing strength. The DMA_H on RadarScreen shows Bullish on all time frames with most of them showing /\ which means it's bullish but has turned down. (See below.) It's hard to tell whether the market will head on up or drop to the lower SunnyBands.
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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. I can have them sent to you directly from my trading platform. 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.
Fibonacci Retracements and Extensions
Fibonacci extensions are coming true all over again. The ES is supported by the Fib line at 4.292 and attracted to the line above at 4,584. We are currently at 4,452 with the ES futures currently up 15+ points as I write this. Will that make tomorrow up also? Don't know; I don't know how the overseas markets will trade after I go to bed. The next Fib line lives at 4,584 but we have to best the 4,500 level, which is a Natural Number and will present inertia to prices trying to close above 4,500.
Allow me to show you a new chart, above, with Fibonacci Cycles drawn on it. From this perspective we can see that the 377 (a Fib Nbr) day extension lies right on current price! Since we basically have gone steadily upward since the Covid low on 3/23/20 I can't tell you what these cycles mean. But they are interesting. From my read of this chart it looks like at 610 days out from the high of the crash will be the end of the next cycle and I would surmise that we will have a correction during that time and near or at the 610th day would be another high. Will it be 50,000? I kind of doubt it, as 610 falls on October 14. Will we have another crash near that day? It wouldn't surprise me as crashes often happen in October. We shall see.
To get a long-term perspective, let's look at the various positions called for by the consensus of timeframes.
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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. It not only has my DMA_H (nothing sorted today) predictions, but has the PHW indicator which allows me to see which stocks are the most tradable. Since nothing is sorted today, you are looking at the stocks alphabetically. Notice the mix of colors. To me this indicates I should be wary of a downturn since so many of the stocks in the NASDAQ are bullish but turning down and so many are purple. There are relatively few gold stocks, showing true bullishness.
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.
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 right, only the few that were the big winners. BTW, I'm up 147% for the year, so far.
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 with this indicator. 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. 1-760-908-3070 PST.
Click Here to see and listen to the DMA_H Live with BingTicks!
TSLA (my favorite stock) has been moving sideways to slightly upward for the past few months, but is slowly moving upward. You can see that TSLA is in a channel between 558 and 880. I drew the midline between them and you can see that TSLA was repelled by the midline last week. It looks to me like TSLA has hesitated at the midline, and the DMA_H is bullish but turning over, thus the red lines.
I'm hanging in there with Cathy Wood and anticipating her prediction of 4,000 for this stock. Every time it goes lower I buy more shares.
GOOGL just keeps on keeping on. Despite red bars in the DMA_H GOOGL continues on upward. IMHO this is a great stock to hold forever. Yes, it's expensive. Buy 1 share. Get started somewhere.
Consider getting the DMA_H and SunnyBands for yourself. I totally rely on them for my own trading.
Send me a note telling me what stock you would like to see analyzed next week.
BitCoin, Gold, Bonds
BitCoin
Recovering from its move down, BitCoin is now above its Attractor at 47,618 and heading on up. It will probably try to drop beneath the Attractor and either settle at the Attractor or drop back to the DMA which lies at 43,787. BTC is above the DMA and above the 21 day MAV, which is bullish. Over the long-term I expect BTC will surpass its high of 64,583 and head on up to establish our new digital currencies.
Gold
It's amazing how my DMA stops price movement. Gold has been down this past week, but hit its Attractor at a low of 1,724 and bounced back up. We are currently at 1,789 and the DMA_H is showing bullish. The DMA itself has purple on top, which is bearish, and price is right at the line. Typically price has a hard time moving through the DMA and staggers a bit before breaking through. With inflation kicking up (more than they report; just take a look at the price of your groceries. Last week I was paying $4.15 at the gas pump; this week I'm paying $5.00. I am expecting higher gold prices.How high? I wouldn't be surprised to see $2,000 again. Near future? Nope. Many months, but it is influenced by inflation (which "they" say is negligible.)
Bonds
Bonds moved down sharply last week only to bounce back up on the SunnyBands midline. The move down came from the upper-outer SunnyBand and was stopped by the DMA midline. Gold is now on top with price currently at the upper-inner band.
If price is weak tomorrow it will be halted in its move up by the upper-inner SunnyBand. If the strong hands take over price will move on up to the upper-outer band at 166-13/32. The expected short-term high is at 166-22/32. VantagePoint's prediction for tomorrow is up, but not exceeding the prices just mentioned.
MY DIATRIBE FOR THE DAY
"What Are the Pundits Saying?"
Investors Business Daily: "... gold may be the most undervalued it has been since 2005!"
Robert W. Colby: "Stock prices have run far ahead of quantifiable reality. Stocks are overbought and overvalued relative to traditional measures: sales, earnings, dividend yields, and book value."
Jeff Swanson of EasyLanguage Mastery : "No model is going to predict the average global temperature in 10 or 20 years within a degree. That's not knowable. There are too many variables we don't understand. If a model does get it right, it's a fluke. Consistency is not there. Models are not crystal balls."
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. DISCLOSURE.
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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 charts of the ES.
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