Sunday night September 12, 2021
Ask Mr. EasyLanguage
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: That's what I thought. Last week exhibited sideways to down behavior and capitulated beginning Monday ending the week 823 points down. The hints were there. When markets dip under their highs and can't continue to reach the upper-outer SunnyBand they are headed down. And that's what happened.
Check the home page of this website daily to keep up with the predictions from VantagePoint. The prediction for tomorrow is another down day with a high of 34,952 and a low of 34,314. That's another 293 points down on the Dow putting it down over 1000 points in 6 days so far.
The MAVs no longer look confused. They are decisively down. I will let you know how the indices fare with the MAVs in just a minute.
Notice the orange vertical and horizontal lines, and the trendlines. They are telling. The vertical lines show where the weeks are. I give you predictions on Sunday night, and the rest of the data between vertical lines is what happened for the week. The horizontal lines show my Attractors (aka support and resistance).
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. And you can always look at the home page of MoneyMentor to see the current VP chart.
VP (VantagePoint ai Software) suggests that tomorrow should explore a bit higher price and lower prices as well. But it doesn't yet fulfill new highs as the ES and NQ have done.
The Charts That Worried Me Last Week
Last Sunday I said that the charts of the Dow and EMini S&P 500 worried me. The charts still worry me. This week all three indices gave up at the trendlines I drew last week. The NQ is not as bad off as the Dow and the EMini, both of which were decidedly down. Will we move up from here? Doubt it. At least not right away, until we bounce off of the Attractor at 34,500. The futures this afternoon are about as flat as a chart can be. The ES is showing a little tiny curve upward only to go back down near the low of Friday.
Last Sunday I showed you a chart of the Real Estate Crash of 2008 which gave us plenty of warning before it happened. I suggested that sort of stagnation was now showing in the major indices. And the market followed suit. It has fallen about 900 points in a week. What will happen next? Let's look at SunnyBands and my DMA_H.
SunnyBands Implications
Dow Jones
The Dow is now sitting very close to the Attractor that lies at 34,000. Natural Numbers (integers) are often stumbling blocks for market charts. They seem to cause sideways movement as the players try to decide which way to go next. I expect this will happen this week, unless it gives up the ghost and falls to 34,221 or lower.
We are now into the September/October timeframe, when markets often correct. I am still preparing for a correction of some size. I sold most of my stock holdings two weeks ago when the markets showed weakness, but before the down move really started.
The bottom fishing didn't come into play with the move down last week. We will see some buying over the next few days, as traders try to anticipate the bottom. But I don't think the bottom is in yet for several reasons:
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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. Beware October!
S&P 500 (ES)
The ES has been correcting every 21 days or so (a Fibonacci number) at the rate of about 3-4%. This time a 4% correction would take it to the 55-day MAV which is at 4,416. Let's call it 4,400. Why do I use 55-day MAVs instead of 50? Because 55 is a Fibonacci number it makes more sense to me.
The ES has corrected a bit, but not much. I expect more. The next Fib Line is at 4,323 which is also an Attractor from previous highs. AND, we haven't had a real correction since the Covid Crash in early 2020. That move down was a 35% drop. I am still expecting a correction of about 21%. (Get it? a Fibonacci number.)
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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 holding the market up so far. The is another line down at 4,239 basis the ES which still wouldn't be much of a correction. If we hit a real correction, say 21%, it would not only take the ES down to another Fib line it would be less that recent corrections it would drop the ES down to 3,585 or so. It seems about time for such a correction to me.
The Fibonacci Speed/Resistance Arcs on the above chart at the far right tend to portend a correction! Sometimes the corrections happen before the arc and sometimes after, but it is a pretty good predictor.
Also notice that I have drawn a trendline over the highs on the ATR (Average True Range). It has been steadily decreasing since
To get a long-term perspective, let's look at the various positions called for by the consensus of timeframes. Only the short-term indicators are bearish. The other timeframes are bullish but turning down.
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Call me (1-760-908-3070) and I'll send you a 7-day FREE trial of these indicators for you to see for yourself. Don't want to call? Just fill out your questions and desires on my Comments form and I'll get right back to you.
Stocks
In this section, I like to 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 table above is my main research tool. It not only has my DMA_H predictions, but has the PHW indicator sorted which allows me to see which stocks are the most tradable. Notice that AMZN is the most tradable on a daily chart with a PHW over 10,000. That means that trading the swings on this chart could yield $10,000 per share over the 4 year timeframe . AMZN is great for a swing trader because it vascilates back and forth four or five hundred points every 4 to 6 weeks.
When 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. This is how I decide what to trade.
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. I specialize in a handful of stocks for the long swings and the EMini futures for intraday trading.
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 or the PHW which shows me the most tradable stocks. Call me, I'll explain it. 1-760-908-3070 PST.
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AMZN, the stock with the highest PHW, is in my focus today, since it was also last week before the move down. Looking at the yellow highlighted area you can see that AMZN is bound in a trading range. There is an atypical double Head and Shoulders pattern that would garner some hurt if the objective were realized. A 38.2% retracement would put it at 3,285, down 488 points from its high (3,773). AMZN has great swings for a Swing Trader, typically 400-500 points in cyclical moves. it seems to move in well-defined swing. I'm going to give you another chart of AMZN below the next chart, so you too can see the swings. Many stocks I hold in my long-term portfolio for investment (unlike my rapid-fire trading on the EMini) but Amazon is not one of these. I swing trade AMZN.
Notice a newish indicator on the charts My PennantFinder indicator draws congestion patterns, highlighted by blue triangles and red breakout lines. This past week, while Sam Tennis and I were working on our new book "TradeStation EasyLanguage OOEL Made Easy!" he taught me how to highlight the pennants with a yellow background. It definitely makes it easy to see. If you already have this indicator, call me or email me so I can send you the update. (Updates are always free.)
This next chart shows where I estimate the cyclical nature of AMZN to be. With vertical lines I have market the recent highs and lows. Note how the cycle lines at the bottom of the chart align with price movement. AMZN typically cycles about every 20 days or so in swings of 400 or so points There is a reason it is on the top of the PHW list. The play would be to buy low and sell high. Note how the DMA_H reds and purples align with the cycles.
Cathy Wood's projection for TSLA (below) is 4,000 at this juncture. She may raise or lower her projection, but this is it currently. While the week was down for the indices, TSLA held strong and only capitulated one the last bar of the week when it lost 3.77 points. The gold DMA line is still above the purple, a sign of strength. But so is the rest of the market. I show an Attractor at 780. Current price is 732.50. Fifty points up? Probably not just yet. The DMA lines are at 720, which is where I would see it going next, if the market overall doesn't rebound. If it does rebound I'm looking at the upper objective happening. If it goes lower, I'm again a buyer of the weakness.
ADSK not only had a big down day noted in last Sunday's missive, it has continued on downward after that, losing 17% from its high. Not only that, but it is poised to go lower. It is now under its 21-day and 55-day moving averages by a lot. It closed Friday at 284. The next Fibonacci level down is at 276ish. That's another 8 points down. I don't know the weighting in the S&P or Nasdaq indices but my question is: will it bring the market down with it or does it portend that the rest of the market is also headed in the same direction?
Buy the DMA_H and SunnyBands for yourself. They are life savers. 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
BitCoin is suffering also. There was one big down day last week and the rest of the week was "sharply sideways." The DMA gold line is still on top, showing strength, but the DMA_H has shown bearish. That doesn't necessarily mean it will go further down. The way I trade it is to see what direction the histogram is alluding to and then govern my buys and sells depending on the direction of the following bars. If price doesn't go down, I'm not going short. Usually it will give you plenty of notice to catch the move. I also see on the chart that RSI has peaked and is below 60 (I use 40 and 60 per the works of Connie Brown.) All together the chart reads lik a bearish chart unless price gets back above the DMA lines. At 7:10pm as I write this, BTC is down on the day at 45,185 but moving VERY slowly on the 1-minute chart. I'm still believing in the Crypto Culture as a planetary currency. Only time will tell. At the very least it will encourage computer manufacturers to make faster processors.
Gold
Gold futures are trading up from yesterday's close, currently at 1,790. And, it bounced off its lower Attractor. The DMA_H has been in divergence with price action during this last bounce. I am still a holder of and believer in the metal. I don't speculate in the gold stocks since so many factors can govern its mining and business practices. I like the physical and believe we will still see $2,000 gold.
Bonds
Bonds are still hanging out right at the DMA lines at 158 30/32, neither showing weakness nor strength. They have been in a little channel going sideways since 7/19/21. All the while though price has also been congesting into a triangle formation. That would say that price should soon break out to either side. I'm not a buyer or seller at the moment. I wait for the market to tell me what to do. There is heavy support at 160 and resistance at 165. We shall see.
MY DIATRIBE FOR THE DAY
"Ask Mr. EasyLanguage" - Samuel K. Tennis
Sam Tennis and I are writing a new book together: "EasyLanguage Object-Oriented Programming Made Easy!" You already know that.
What I'm going to tell you TradeStation folks out there is that his own book is "Ask Mr. EasyLanguage." It was written for the express purpose of helping users of TradeStation understand EasyLanguage.
Mr. Tennis provides the basics and then goes further by naming specific problems and taking the reader through the steps of correcting and understanding the solutions. The goal Mr. Tennis sought was to demystify EasyLanguage so that everyone could use it. He clearly accomplished that goal.
Anyone who has any interest in TradeStation at all should read this book. Sam was the lead designer of EasyLanguage when he worked at TradeStation (then Omega Research) and knows more about it than anyone else, since he wrote it in the first place. Get yours on Amazon.
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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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"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 charts of the ES.
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