The Sunny Side of the Street

SUNDAY NIGHT - May 11, 2003

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DOW JONES 30 INDUSTRIALS ANALYSIS

Figure 1: Daily INDU

The Dow is congesting under the 8648 line, not pushing up and over, and not dropping radically. Here again, we have some more sideways indecision going on. ATR is continuing to decrease, echoing the congestion, but RSI is still holding above 60. That's a positive sign. My model is still long the Dow from the blue arrow on the chart in Figure 1, which is a pretty good trade.

On the intraday chart the formation looks a bit like a double top, or a Head-and-Shoulders with a double head. That would call for some more downside action to clear out the pattern. If that happens, I think it is likely to stop at the 8500 mark and try again on the upside.

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QQQs NASDAQ ANALYSIS

Figure 2: QQQ Daily

Figure 3: QQQ 15-min intraday

The daily QQQ went over the 28.31 mark on one day's close. The other ventures over the line were just on an intraday basis. But, then on Friday it went back up through the line and closed above it. That's a positive sign.

The intraday model went into a buy signal at 7:15amPT Friday where it still holds. The last two bars of the day on Friday were doji bars, signaling a big reversal to follow. Since both were solid bars (filled/solid means downward movement) the quick move on Monday has more likelihood of being upward. Friday's close plus one Average True Range would put the QQQ at 29.02 for Monday's close.

SPY (Standard & Poors 5000) ANALYSIS

Hitting the 93.60 mark did put a bit of a stop to the SPY's upward movement, as I suggested in the 5/4 commentary. But, then on Friday the quick one day down was reversed by a day up in the market. That's five days of backing and forthing, each day reversing the other. That could go on ad infinitum, or the market (just like the others I've been analyzing) could jump quickly and break through the line.

Figure 4: SPY Daily

I see no reason to rush the gate, or jump the gun, or .... here. It's a little too early. Wait for the market to give a clue. Monday's action will be very telling. That is it will if it doesn't just go sideways again. Unless something radical happens, Monday looks like a good day to take a vacation and let the market do some talking.

E-MINIs ANALYSIS

Figure 5: E-Mini Daily

Figure 6: E-Mini Intraday 15-min

Thursday was a quick single day dip, as I expected in Wednesday's commentary. Friday was the rebound day back up from the line of resistance that goes right across the pay to the exact lows of Thursday. My model went into a buy signal on Friday at 7:15amPT. Nothing has yet signaled an exit from that buy signal. Price is not as high as 3 days previous, so there is more room at the top, up to about 937 to be more exacting.

Looking at the Daily chart of the E-minis, in Figure x above, you can see the heavy line of resistance right about where we are now. So, not much room left at the top, but some. Then some drama has to take place. It's about time for the market to make a decision. Either it has to be a quick slice over and above the box, or it's back into the box again for some more sideways chop. After the next 5 points up, I'm thinking I'd be better of on the sidelines for a bit, with a little wait and see, before going long or short. There's plenty of time for the trades to come after the market shows its hand.

EURODOLLAR ANALYSIS

Figure 7: EuroDollar Daily - Sunday night commentary only

EuroDollar is now beginning to show some reaction to the sell signal of a few weeks ago. The formation looks like a rounded top now, with an impending down move. Stay patient. Unless it goes up, it's going down.

GENERAL INFORMATION

I am now very cautiously watching the market for long plays. Since we tipped barely above the Yellow Box tops, I am alerted to potential continuing up moves. Nevertheless, I am still cautious about impending failures since the move above the yellow boxes was slight and could easily be retraced.

RULES OF THUMB:

1. When price is pushing the upper Sunny_Bands upward and then eases off and moves back toward the midline, it's time to take profits. If it starts moving up and pushing on the Sunny_Bands again, it's time to get back in. Likewise, if the market is pushing down on the lower Sunny_Band and eases off to move back to the midline, it's time to take profits from the short play.

2. Divergence of the RSI and price is another good time to take profits and wait for a breakout of price before taking a position.

3. When the exchange puts in curbs or trading halts on a large move down, it usually (not always) stops the downward motion. After the market reopens is a good time to take profits from your short position.

4. The market can't go nowhere forever. Eventually, who knows how long it will be, there will have to be a breakout-- one direction or the other.

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