The Sunny Side of the Street
SUNDAY
NIGHT - May 18, 2003
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Figure 1: Daily QQQ
We now have our fifth day wherein the QQQ could not make it above the bar I have drawn at the 29.12 level. That is not a very strong showing for the markets. I don't need to address them separately as they are all following along in tandem right now, each waiting to see what the other might do. While this lack of ability to penetrate the 29.12 level on the surface looks negative, it could very easily be a pennant formation setting up which will resolve in the direction of the flagpole preceding it, which would take the QQQs on further upward. It's too soon to tell, but we should see action in the next day or two that will tell use whether to stay long and hold on for more profits, or to get out and take the profits we have to this point.
Other than that, there's not much to say. The same thing has happened now for five days in a row, and I think I've about said it all.
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Figure 4: EuroDollar Daily - Sunday night commentary only
EuroDollar is
still on a sell signal, barely budging since last week. It looks like
it could go on up a little further before going down in response to the
signal, but currencies set up trends and take a long time to develop.
So, let's keep watching.
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.