The Sunny Side of the Street

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QQQ_D_20030303.jpg (147017 bytes)
Figure 1- Daily QQQ [click to enlarge]
MONDAY NIGHT - March 3, 2003

Last night I sent out an email, rather than the usual web page commentary.  My thoughts were that the indecision in the markets would continue and if anything, I would be betting on the downside.  Today's market bore that reasoning out, with continued downward movement.  The initial up move

spy_d_20030302.jpg (143594 bytes)
Figure 2- SPY Daily

at market's open generated an outside bar, which is a bar whose low is lower than yesterday's low and whose high is higher than yesterday's high.  An outside bar is generally considered to be a reversal day.  So, today was first an upward thrust followed by a waterfall down.  (See Figure 3).   
The waterfall downfall was tempered midmorning by the formation of two pennants on right after the other.  This amount of congestion was a hint of more to come, watching both the top and bottom sides of the pennant (marked by the red lines on the chart).  The market then penetrated the outside of the pennants and continued the fall.

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Figure 3- QQQ 15-min Intraday

The Attractor at 24.60 was the essential stop off for the downfall at the end of the day.  This level is echoed by the congestion we witnessed on the 26th and because of this double experiencing of the same area of hesitation, it is likely to be experienced again.  By this I mean that tomorrow's market will likely hesitate at this 24.60 point and create another area of congestion.  For this reason, I will be watching this congestion very carefully, neither going long nor shorting until the market speaks compellingly.  When it is clear that the market has chosen a direction, I will then take a position, but only for very short-term trades.  I still think we are in for a bumpy ride and I am not likely to jump into any long-term trades any time soon.

The Attractor at 24.91 is a likely stopping place if the market tries to have any up moves, though I rather doubt it will go that high.  The first level lower boundary lies at 24.45, and that is where I think it would be more likely for the QQQ to line up.

The SPY looks like it has a little way left to go on the downside, and is likely headed for 83.61 before it congests and/or bounces.
Watch carefully, stay on your toes, and give thanks for all the lessons you learn.