The Sunny Side of the Street

The market's first reaction this morning, on the news of war, was negative--dropping almost instantly down to the bottom SunnyBand.  From that SunnyBand the market bounced soundly back upward to the upper SunnyBand.  The upward march for the remainder of the day put the market right back on the trendline it had been following for the last three days.

Figure 2- QQQ 15-minute

The NASDAQ QQQ, on the other hand, is still having trouble getting out beyond the Attractor at 26.81.  The QQQs did get out above the line, going as far as 27.14, but then retreating right back to end on the 26.81 line.

Figure 3- INDU Daily

All three of the indexes I watch are creating broadening formations, on the long-term (daily) and the short-term (15-minute) charts.  Broadening formations are often reversal patterns.  If current market movement were to be reversed, then that would indicate near market movement to be downward.  And, by my analysis, if the next move is downward it should be stopped by the Attractor at 8000 on the Dow.  From the current level of 8286, that would be a loss of 286 points.

Personally, I think that despite all technical indicators, if the war in Iraq shows positive results, the market's reaction will be to move on upward.  As I write this tonight the news reporters are arguing whether Wednesday night's strike "got" Saddam Hussein or not.  Was the video actually Saddam or was it one of his look-alikes?  (My vote is that was a look-alike, not the man himself.)  As facts immerge and guesses are dispelled, I believe the market will react positively, regardless of where the technicals say the market "should" go.

From where I sit, it looks like the Dow should next touch the Attractor at 8413, at 90 on the SPY and the QQQ at 27.54.  Play it carefully as the lack of information and the preponderance of guessing can only lead to jerky markets for the time being.

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