The Sunny Side of the Street

MONDAY NIGHT - June 16, 2003
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)

Figure 1b: INDU Daily

In last time's commentary I said:

"...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."

And just as clean as a whistle, that's what today's market did, with the Dow moving 200 points up from 9117 at the open to a close on the highs at 9318.

What happens on the day after the day after?  Aye, there's the rub.  Well, by my analysis of expirations, the 2nd day after seems to be a continuation of the move that was already in progress, and generally in the same direction of the 1st day after expiration.  Thus, it would look like only the expiration day is contrarian.

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All other signs still seem steady, with the propensity toward moving up (probably faster now) toward the next level of Attraction at 104.84.  We have been in a nice straight line trend upward (and on a Daily Buy Signal) since March, and it would seem likely that if it is going to continue it should start gathering some steam.  That pick-up could put it in a little bit of a parabolic shape as the market approaches 104.84.

It just seems too steady to continue moving in such a perfect straight line for so long.  I do see a tiny little divergence in the RSI with respect to price just over the last 3 days.  Be careful of that sign, as any divergence should be watched warily; it can often result in a spike correction.

For the size of move the Dow made today, I would have expected a bigger move from the QQQs.  Don't get me wrong, I'm not disappointed, up is still up.  The next upward Attractor on the QQQs lies up at 33.79, so get wound up and ready for the pitch.  That's still 3 points away.  If it fails, I'll know by the move it will make under 29.32, which is just about where the Sunny_Bands midlines are right now.

The short signal from yesterday turned out pretty puny, but today's long made the day worth it.  The model got long at 994 and is still holding at tonight's close of 1009.50.  That's a pretty 9-1/2 points!  And, I'll be watching it tomorrow for any suspicious movement touching the center lines in the Sunny_Bands--in which case I would take profits and wait.

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.