The Sunny Side of the Street
Figure 1-- INDU Daily Chart
In Thursday night's commentary I said:
- "I'm buying, looking for a push to 26.09 at the very least, where we will probably encounter some resistance."
On Friday morning the QQQ pushed quickly up to 26.16, in just two 15-minute bars, and then encountered immediate resistance, dropping quickly back down to the Attractor at 25.66.
As I have been saying in past commentaries, the market is moving in one- or two-bar moves that form most of the day's movement and then spending the rest of the day moving sideways, or retracing the initial move. It is a stacatto, hectic motion that doesn't really allow for much trading. (Figure 2)
Figure 2-- QQQ 15-minute chart
Friday put in the move I called for, almost exactly, and the spent the rest of the day trading in the range between 25.33 and 25.66. There again was another next-to-impossible situation to trade.
Now my SDMA is in a sell position, but I am reluctant to believe that signal, because of the reaction in the RSI. On the 15-minute QQQ chart in Figure 2 you can see the red line extended along the bottoms of RSI, as the RSI is in a rising pattern. That alone is enough to make me stay away from the short trade unless I get some serious confirmation that the market is moving down.
But wait, there's more! In addition to the RSI drifting upwards, Friday's prices didn't quite make it down to the Attractor at 25.33. That, however slight, is a show of strength. And, Friday's action created a double-bottom with April 01, which also shows me signs of strength.
Figure 3-- QQQ Daily chart
Yet another show of strength is that the QQQ prices are still within the yellow box (Figure 3) and, more to the point, is the bounce off the upsloping trendline that extends from 10/8/2002.
For tomorrow, I expect we will see one more narrow day, testing the lows, and on Tuesday we should see a stronger move upward, as prices push out of the congestion.
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