The Sunny Side of the Street
SUNDAY
NIGHT - June 15, 2003
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)
(Click on any chart to make it larger.)
Figure 1b: INDU Daily
In last time's commentary I said:
- "On the Dow chart, today's High beat out the high of the Shooting Star,
officially negating it as a reversal pattern. However, on the SPY, the
QQQ, and the EMini, the tops of the Shooting star were not breached. I
am still regarding this sign with caution, ready to jump out of the long
position at a moment's notice.
Stay sharp and on your toes. We have had several up-days in a row, and a correction could come in the near future. But, as long as the markets are going up, they are going up--so I'm sticking with it."
Though negative, today's down move did not change my outlook. The reversal was probably due to the options and futures Triple Witching expiration (on a Friday the 13th, no less!) As such, it usually turns right back around on Monday and reverses the reversal. So, which ever way it goes on the Friday expiration, Monday will usually go the other way.
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Figure 2a: SPY Daily
All the other signs remain constant from yesterday and the day before. Friday's move could have signaled a double top, but somehow I doubt it.
The market still looks like it could continue on upward, with a few hiccups and bubbles along the way.
Figure 3a: QQQ Daily
The QQQ is still above the Yellow Box, although Friday's move made a bit of an attempt toward the box. It could easily remain for a retest of the top of the box, but if that happens I think a bounce off the box is likely.
Figure 4a: EMini Intraday 15-minute bars
On Thursday the intraday EMini bounced back through the middle of the Sunny_Bands, calling for an exit of long positions, per the rules of thumb below. Friday morning then issued a short sell signal on the model, which ended about where it began. Nothing much to say for that one yet, except beware; shorts seem a bit out of favor at the moment.
Figure 5a: EuroDollar Daily - Sunday night commentary only
Don't you just hate it when markets get into those choppy sideways periods? There is nothing much you can do but wait for a trend to emerge.
When currencies trend they do so for long periods, and when sideways, ... well, I guess that could go on for a long time as well. Friday's move up left the chart looking like a quadruple top. Unless the EuroDollar breaks above 99.11, then it could continue on repeating this pattern of choppiness, with the downside being at 98.9.
The
current signal on the EuroDollar model is long, from Thursday. It's
not much of a signal yet, but rather a continuation of a long sideways
period.
Stay sharp and on your toes. We have had several up-days in a row, and a correction could come in the near future. But, as long as the markets are going up, they are going up--so I'm sticking with it.
RULES OF THUMB:
I keep the chart in Figure 1a on each day's commentary simply to illustrate how much in tandem the 4 indexes I watch actually are. For this reason, I don't always comment on every index. Analysis of one speaks highly for the same analysis for each of the other indexes.
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.