"The Sunny Side of the Street"

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Commentary

TUESDAY NIGHT--OCT 29, 2002:

Now that was what I call a fun day! We had two beautiful intraday trades (for the Platinum Subscribers):  one short and then one long.  More about that in the Platinum Zone.

INDU - DOW JONES INDUSTRIALS

We didn't get a commitment today, but we did get a sharp move down at the open on bad news (consumer confidence was low), followed by a sharp recovery, leaving the market looking to investors like a dull, nearly unchanged day.  The Dow netted only 0.90 points today -- talk about your doji bars!  But, intraday we dropped 171 points in a mere 45 minutes, and then turned around and rose 171 points almost as fast.

We still have the double overlapping cycle pulling the markets upward, see figure to the left.  As I've said over and over the last few weeks, this should last until about Christmas time before it begins to diminish.

Play the strength of the market in strong stocks with high dividends, and by playing the QQQs, SPYs etc indexes.

The small downward trendline is still in effect, trying to attract the Dow back down to the 8100 Attractor, but today's daily bar looks like a twin to yesterday's bar and it doesn't seem to be showing true weakness.  We may or may not see 8100 before moving on up, but for nimble intraday traders it doesn't matter.  We'll play both sides.  For investors: the overall trend is still down.  The market needs to put in a flattened bottom before I'm going to suggest jumping into filling up your portfolio with long positions. 

If you consider yourself a medium-term investor, then wait for the pullback to 8100 and then as the Dow starts heading up, add some of the solid, high dividend stocks into the mix.  You can always exit on weakness.  Over the next year, we will see 9500 again, but I think it will be a cautious move to that level as lots and lots of people got burned in this bear market.

QQQ - NASDAQ TRUST

The QQQs are marching ever steadily upward toward the attractor at 26.89.  Inch-by-inch, day-by-day.  But, while the other markets are moving more strongly upward, the QQQs are suffering from fear of fire.  Once burned, ...  Then NASDAQ took the hardest hit in the bear market, so now everyone is afraid of the NASDAQ.  But, 3 points isn't so far away, and with the current ATR (Average True Range) just under a point, we could get there in 3-4 days.  Then, we have some consternation, as the Attractor at 26.89 is a pretty strong one, and will probably push back.  The result will be an "I told you so" from the bears, and only after some accumulation by the bulls will the market be off to the races again. 

The Attractor at 24.44 has pushed and pulled on the QQQs several times over the last few months, and I think it is about to do it again.  The frenzy of buying on the bad news today will probably push the confidence level of the average trader into jumping on board and I expect a pretty good rally tomorrow-- probably with a close at or just over the 24.40 Attractor.

Our daily and our 15-minute models are both in buy signals, so that's what I'm looking to do again tomorrow.

S&P 500 SPooS

The SPoos are pretty much behaving like the other market indexes, so there's not much left to say.  I'm holding long overnight, and holding my breath.  On the daily chart I think we finished the one and two Elliott waves, and are now headed for the most fun part--the three wave.  It should take us into the 1000-1050 range, which will get lots of press coverage saying the bottom is in.  We will probably experience a long and boring bottom formation, but it will be fun watching the press jerk the little guys around as they try to fill column inches.

Intraday we have been running about a 2-day rhythm, so we could expect to see the SPoos as high as 900 tomorrow.

But, be nimble, be quick and ready to go where the market tells us to.

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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