The Sunny Side of the Street

As I said in last night's commentary, my Dynamic Average turned yesterday into a buy signal.  And, what a nice one it turned out to be today!  Not only did today's market head for the 24.60 mark, but it far exceeded that mark and pushed up against a trendline (drawn in Figure 1 above) emanating from 12/2/2002 and 1/13/2003.  There is just a little bit of room left to completely touch that trendline, so I expect it will be taken care of by left-over orders tomorrow morning.  Will we once again see irrational exuberance?  Sure--someday, but markets don't usually turn on a dime and tomorrow is probably not the beginning of the next great bull market.

Figure 2- 5-minute SPY chart

Figure 2 shows how smoothly and deliberately the market moved up today.  Interestingly, however, is my new indicator (OscillatorA) shown at the bottom of the chart--after the initial move up, the oscillator didn't go higher, but piddled along sideways.

Where next?  In Figure 1 you can see that price is now above the midlines of the SunnyBands, but has not yet touched the top band.  I would expect the market to at least make a run for the top band, which currently lies at 26.22.  There is an attractor lying just above that, at 26.61, which was last visited on 6/20/2002.

Figure 3- QQQ Daily zoomed out to show upper Attractor
 

The daily charts are still in sell formation, so that says all buying should be cautious buying with one foot on the accelerator and one on the brake.

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