The Sunny Side of the Street
MONDAY NIGHT - May 12, 2003
(Click on any chart to make it larger.)
Figure 1: Daily INDU
Up, up and away! The Blue Arrow, from whence
this commentary was Long, still holds. In fact, it is about 600 Dow
points under us now! Pretty outstanding performance. From the
picture the market action built today, I would say that the next stop on the
Dow is at 8836, where it will encounter resistance from previous prices and
from the new red, upsloping trendline I drew on today's chart.
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Figure 2: QQQ Daily
Figure 3: QQQ 15-min intraday
In Sunday's commentary I said the QQQ should close today at 29.02. Today's close at 28.86 is not very far off that mark! Pretty good I'd say.
Tomorrow I still expect some more activity on the upside, at least
hitting the 29.02 mark, but more likely hitting 29.32 (marked on the Daily
chart in Figure 2).
Figure 4: SPY Daily
Today's market talk was certainly to the upside. It gave a pretty clear indication that there was some thrust behind the buying. My fear is that since the volume on the SPY was low that the "buying" was actually short-covering. A little more of that, popping the SPY on up to 96.38 and we will then see some resistance.
Figure 5: E-Mini Intraday 15-min
Today's E-Mini made the quick pop over the top, but then begrudgingly began a slow turn away from the frenzy. It was done, however, on ever decreasing volume, which concerns me. The RSI on the QQQs is beginning to show some divergence, which is likely to result in correction, although I am guessing it will not be until after noon tomorrow.
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.
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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While it may be true that a picture is worth a thousand words, it is definitely not true that a picture deserves a thousand words.