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Commentary

WEDNESDAY NIGHT, OCT 23, 2002:

The Dow30 has 3 times now retreated on the overhead Attractor at 8530, not being able to push up through it.  This is not a good sign, but not necessarily a bad sign either.  The Dow can retreat and the NASDAQ (QQQs) still rise, and it looks like the Dow might stumble back to the 8100 Attractor.  The divergence on the RSI is still holding and is a strong positive sign for the Dow; price is still above the Sunny_Bands upper band, and the sjh_DMA is still in buy position.  All these are positive signs.

Some of you asked whether I watch the S&P 500, as well as the QQQs and Dow.  Yes, I do.  But I don't make any suggestions that one should trade futures.  Remembering that everything said in this column is for Educational Purposes only, I can tell you that the SPZ02 15-min chart model got a buy signal today at 12:15pmPT.  The QQQs got the signal just a little bit earlier at 11:30amPT.  Getting the signal on the QQQs and trading it on the S&P is almost identical.  The QQQs, the DIAs, the SPYs and the S&P500 are so highly correlated, that the signal works just as well on one as the other.  The only thing missing would be my calling out the Attractors, so you can set profit goals and stop losses.  So, I'll do that for a while and see if I get any subscribers for having done so.  If not, I will discontinue the added effort.

Traders: We did as the model said, and as I predicted it was a whipsaw trade.  The overwhelming evidence is still to the upside.  Double overlapping cycles still have a long way to do before they quit pulling upward and start exerting downward force.

The model went long at 11:30amPT, but I recommended to ignore the trade unless we broke out above QQQ 24.40 to the upside. It looked like we could go either way, channel trade or resume the trading trend.  So, without convincing evidence I didn't want to go in long.  The QQQs passed through 24.40 like butter, so our model is now positioned long.

On the 5-minute QQQ chart, we formed a pennant at the end of the day, suggesting that there is more upside activity to come tomorrow.  If you are a very fast intraday trader, watch the 24.44 level very carefully tomorrow, as it has been a strong Attractor for many weeks.
 

Investors:  We have had a nice run up on the QQQs on the daily chart, and I expect the long position to continue on upward until we get close to the next Attractor at 26.19.  At that point it will be a difficult decision what to do.  RSI will be well into oversold territory, Average True Range will have widened, and we could very easily capitulate and resume the channel trading from July forward.  ADX will let us know whether we are still trending or whether we are entering a sideways range.  If it becomes a range, we'll either stand aside, or go short back down to 21.27, depending on your comfort level and personal style.  At this point, we are still holding long, and probably will be until the double overlapping cycles begin to wane.  On the weekly QQQ chart, the suggested move upward is confirmed by an Attractor at 26.89, which will probably put a temporary stop to upside action.

SPoos Attractors:

950.00 and 911.50 are looming overhead, pulling the SPoos upward.  855 is below us and should act as support.  Very long-term, it looks like we could be headed for a move on up to about 1049, of course chopping along the way.  Both the long-term and the short-term SPoos models are in buy position.

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