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Commentary

SUNDAY NIGHT--OCT 27, 2002:

GENERAL

Only two of our stock picks for the week past were triggered.  On 1000 share purchases, neither met their stated goals, but instead lost 1 cent each for the week, giving us a total loss of $20 on stock purchases.

INDU (Dow Jones 30 Industrials):

[Analysis of the INDU includes, by its very nature, analysis of the DIAs. Attractors are given for both.]
Figure 1 shows the Dow is still climbing up escalating, overlapping cycles.  I tried to do something a little different from most analysts and divide the larger cycle into non-standard partitions, and found that there is a different harmonic at thirds to the larger cycle.  It still puts the two overlapping cycles and our current timeframe with the momentum to the upside.  I expect we will continue to climb generally upward on these overlapping cycles for nearly 2 more weeks.  After that time the overlapping cycles begin to exert downward pressure and we'll probably be in for another scary downturn.

The Attractors are drawn on the chart in Figure 2.   You can see that the daily upward movement has been stopped each time for the past 5 bars by the Attractor at the 8530 level.  Today we continued with the broadening formation we mentioned in yesterday's commentary, but the closing price was at the top of the bar.  A positive sign.  We are still holding above the midline of the Sunny_Bands, and in fact are still pushing upward on the top band.  The ATR (Average True Range) is beginning to diminish somewhat, but only slightly.  ATR is now at 260 points per day.  That's still a hefty range within which to catch a few bucks.  Recall that 8100 is a powerful Gann attractor and price is currently being pulled in that direction.  Nevertheless, the long-term model is still in a buy signal and the intraday model went back into a buy signal today.  This would be a perfect place to make a Head-and-Shoulders formation and then fall to the H&S target of 8100 as another technical excuse for being there.

QQQs:

Figure 3	Figure 4

On the daily chart (Figure 3) we are still below the cyan uptrend line that we drew last week.  That's disappointing from the emotional side.  Technically, however, we are still pushing up on the top Sunny_Band and RSI is still right below the bullish range, clocking out at 62.98.  We want to see a push upward taking the RSI into 65+ territory, and we should because of the overlapping cycle theory.  ADX is rising nicely, showing us that we are in a trend, and the moving averages tell us it is an uptrend--as if we couldn't tell by looking.  The ATR is still below 1 point per day, and I would like to see it move higher for those of us who prefer trading over investing.  Our buy signal on the daily QQQ has been in force since 10/18 at 23.81, for a current profit of $4,050.  That pretty nice, but I'm starting to become antsy and want to see it move more than that.

You can see from the chart in Figure 3 that we continue to bang our heads up against the Attractor at 24.40, though we did push slightly through it today, with the close being near the top of the bar's range.  That's a positive sign.  The next daily Attractor is at 26.19 and we should see that next week.

On the intraday chart (15-minutes) we went into a buy signal at 11:30amPT on the model.  Our previous instructions had been to ignore the short, as I thought it was just going to be a whipsaw, and it was indeed.  So, in reality we have been long since the preceeding buy signal on the model at 11:30amPT on 10/23 at 24.33.  So, we have a little bit of profit in that trade instead of two whipsaw losses.

In Figure 4 you can observe an interesting phenomenon along with me.  Each morning the ATR peaks at about 9:30amPT and then begins to diminish for the remainder of the day.  What does that mean?  I think I'll do a few studies on it this weekend to see if there is any "time of day" constraints that we can use to improve our trading.  If you have any thoughts, please feel free to share them in the commentary box below.

Meanwhile, the next overhead Attractor is at 24.88 and we should see that price on Monday.  (Unless, of course, there is some kind of world catastrophe.  (I'll hence forth refer to this caveat as UWC.)

The Attractor below us, which we will use as a Stop Loss or an excuse to go short is at 23.75.  Don't jump the gun on this one, however, as we have touched it several times without going below it.

SPoos:

Short Term: We are in a short-term buy signal on the 15-minute model.  Tomorrow we should see 902.78, and then a little hestitation.  If it slams on through that mark without hesitating, that's a fantastic sign and we will see the long-term goals come about sooner than later.  The good, if not great, news is that we have penetrated the long-term downward trendline.  Not only that, but we have tested the line several times and have not again broken through it.  The downward trend line has become support!  We've been having some trouble pushing through the 900 level Attractor, but I think we will pass on through it this week. 

Long Term: 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.

Stock Picks:

Watch the table below.  Stocks are picked on Sunday nights and are to be exited at (a) the stop loss, or (b) the goal, or (c) before Friday afternoon.

How Did We Do?
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Weekend Stock Alerts

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This week's (10/28/02) Sunny Side of the Street Weekend Stock Alerts:

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