NOTE: As a Platinum Zone member, you may call Sunny at (760) 930-1050 if you have any questions about terms used herein.

Commentary

TUESDAY NIGHT, OCT 22, 2002:

Thank you to Fari Hamzei for the opportunity to "speak" this afternoon on the Hamzei Analytics website.  I would like to welcome all of you who signed up for the free week here at Sunny Side of the Street Platinum Zone, and introduce you to our service.  Normally priced at $139.95/month, the Platinum Zone is $99.95/mo for the 1st 3 months if you enroll during your trial week.  Each evening which precedes a trading day I make commentary about Technical Analysis aspects of several market charts.  This is kind of like Ma Kettle's restaurant--you get what we are serving today.  Usually I comment on the Dow 30 Industrials and the QQQs.  Once in a while I throw in the S&P 500 Index.  For those who stay in the free Bronze Zone, the commentary is on daily charts only.  For those who become members of the Platinum Zone I also comment on 15-minute intraday charts as well.

I have an extensive glossary available in this website, in case you find any terms with which you are not familiar.  If you are a member, you may call me and I will explain terminology for you.

Most of my analysis is done using traditional Technical Analysis methods, such as RSI and ATR (Average True Range).  Two areas that I always refer to are inventions of my own, so let me introduce them to you.  (1) Attractors: I believe that areas of Support and Resistance, as well as Moving Averages and Trendlines act as magnetic forces on price, attracting and repelling price as it nears these zones.  That is why I call them Attractors.  I identify these Attractors for you in each commentary, telling you where they lie for tomorrow's trading.  (2) sjh_DMA: in 1989 I created a Dynamic Moving Average that varies its internal calculations with the velocity of the market.  When we are in sideways, channel trading markets the sjh_DMA uses wider parameters than when we are in trending markets.  The sjh_DMA tends to avoid many of the whipsaws generated by most moving averages.

The charts you see in my commentary are current with each day's commentary and are generated by TradeStation, which is the primary software I use to trade.  The charts are thumbnails of the actual charts, so that if you click on the chart you can view an enlargement and see plenty of detail.

Again, welcome aboard, and don't hesitate to call or email if you have questions or suggestions.

Oh, and PS, I have been asked if I also follow DIAs or SPYs or specific stocks, or ....  And the answer is yes.  I will analyze any single stock in the Pay-Per-View Zone for a mere $5.95 per chart.  And, most importantly, all the stocks and indexes tend to trade generally together.  So, for the most part, a signal on the QQQ will also be a valid signal for the DIA or SPYs or the SPoos.

Commentary

Today's daily Dow created an inside bar as the markets got stuck between a rock and a hard place on the technical charts.  On the one hand there is an upsloping trendline drawn on the lows extending from 10/10/2002.  That technicality pushed prices upward.  On the other hand, there is technical resistance at 8530 (Attractor), which held prices down. (More specifically, this price is the top of a pennant formed in August.)  The market was reluctant to push through that zone and stick its neck out.  The next Attractor is 200 points higher, at 8730, and over the next few days that will act as a magnet pulling prices upward.

The trendline off the lows is sloping at 63 degrees, and markets tend to stall at about that angle.  In fact, they try to stay near 45 degree angles, and oscillate back and forth from 30 degrees to 60 degrees as they aim for 45.  The steepness of the slope is another reason that price stalled today -- it's looking for a little cooling off period.

RSI is in a beautiful divergence with price, setting us up for a nice run up on the Dow, into the 9065 range. 

I have also been talking over the last few weeks about the 2 overlapping cycles which are pulling price up quickly.  If you want to read more about the cycles in past commentary, check out the Archives by clicking here.  The cycles are still acting in tandem, continuing to pull price upward, and they will continue to do so for another month or two.  This combined with the divergence on the RSI sets us up for a bullish period in the markets.  How long will it last?  Is it the end of the bear market?  No one can know.  There is no such thing as forecasting, with any accuracy.  All we can do is follow very closely behind the market, picking up little bits of profit with regularity and we succeed.  We just read the signs along the way as best we can.

QQQs Commentary & IntraDay Analysis

On this chart you will see the Attractors, Sunny_Bands, and sjh_DMA called out with text and pointers for clarity.  To the right edge of the chart you will see the cyan trendline that I referenced, which is sloping upward at about 63 degrees off the lows.  This same line is on all the charts of general market behavior.  Sunny_Bands are formed by adding 1.5 * the current Average True Range to the sjh_DMA (Sunny J. Harris Dynamic Moving Average) on the top side, and subtracting it from the sjh_DMA on the bottom side.  I find that these bands work nicely for setting profit targets and stop losses.  A market doesn't tend to get very far away from its moving average, and in fact won't go much beyond its ATR distance away from the moving average.  So, when price gets extended out to the outer Sunny_Band, it tends to snap back to its moving average.  And, remember these are Dynamic Moving Averages, so they are self-adjusting to the speed of the market.

Today's intraday QQQ worked sideways in the narrow range between the Attractor at 24.40 and the Attractor at 23.75.  All in all, unless you were already in a position from the model's buy signal on the 18th, there was nothing much to do today.  We got a sell signal on the model at 11amPT, but I warned that I wasn't going to take it unless we dropped below the attractor at 23.75.  In fact, it did put in a closing price below 23.75, so I went short, and the market simply turned around and went back up.  Remember, drawdown happens...get over it.  So, we'll see where the market goes tomorrow and be ready to get out of the position quickly if it (a) gives a buy signal or (b) moves up through the Attractor at 24.40.  My guess is that we will put in a sideways day or two as buyers and sellers settle in to their opinions and the market readies itself for another move of size.

Summary

Investors: we are still long, riding the trendline up from the lows.

Traders: we are short, but I think it will just be a whipsaw loss.  Nevertheless, we do what the model says to do.

How Did We Do?
Click here to view archives of past Platinum Zone commentary, including the Weekend Stock Alerts.

Weekend Stock Alerts

Click Here to go to the Weekend Stock Alerts Archives to view prior weeks' performance.

This week's (10/20/2002) Sunny Side of the Street Weekend Stock Alerts:

The premium levels of membership to "The Sunny Side of the Street" get more details, more commentary and more charts.  The Gold and Platinum levels get access to intraday analysis.  If you are interested, give us a call at (760) 930-1050.  State your name over the answering device, and if she's not in the middle of a trade Sunny will pick up and talk with you personally.  If she's not immediately available, Sunny will call you back as soon as she can, so please leave your name and state your phone number slowly.  Thanks!

The passwords to the premium zones change every day, and you will receive it by email with your notification that the commentary has been posted.  You must be a subscriber to view the Platinum and Pay-per-view zones.