The Sunny Side of the Street
TUESDAY
NIGHT - June 17, 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:
- "...the 2nd day after seems to be a continuation of the move that was already in progress..."
Today's move was essentially upward, although by the end of the day price had moved back near its opening and the net gain on the Dow was only about a point.
Nevertheless, in the ground covered during the day's activity, the Dow saw a high of 9352, which was 30 points higher than its open.
The fact remains, that the ending pattern of today's daily bar is now a doji candlestick, which usually means a big move tomorrow. In fact, it usually means a reversal day for tomorrow, but I don't read it that way. I believe, from other patterns and indicators on the multitude of charts that I read, that tomorrow will be a big up day.
Even though the customary read for a doji bar would suggest that tomorrow would be a down day, I believe that the Dow is now reaching for the Attractor at 9612, and will soon begin to move even faster in that direction. From here, that is a move of about 300 points up, and I think it will be covered in ten days or less.
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Figure 2a: SPY Daily
Similarly, the SPY is reaching for the Attractor above the current market levels, and the next marker is at 104.84 on the SPY. That is only 3 points upward for the SPY, which could be very easily achieved, and in so doing bring the Dow on up with it.
When the SPY achieves the 104-105 level, the market will have a pretty 1-2-3 Elliott wave pattern in place and it will be time for a 4th wave descent. Since the 2 wave was sharply down, that suggests that the 4th wave will be of pennant formation in a sideways to downward grind. That's just the sort of action that gets everyone confused and worried again, since it becomes next to impossible to "predict" the market's direction.
Figure 3a: QQQ Daily
Using my new indicator, Sunny_Bands_Pro, you can very easily see that the bars are green and above the midlines. This clearly illustrates the buy signal on the model, that has been in place now since March.
The goal of reaching the 33.79 Attractor still stands. Today's bar with its open near its close created a doji bar, which has the high probability of being a strong move the next day.
Usually it is a reversal day on a doji like this one, but I'm putting my eggs in the strong-move-up basket for tomorrow.
In Figure 3a it is very clear with the Sunny_Bands_Pro that we are continuing the upward move from March, with all of the bars still green and above the midlines. It has been a beautiful move of classic grace, and in a few weeks it will take the pause that refreshes--after first making it up to the next Attractor which lies at 33.00 on the QQQs.
Figure 4a: EMini Intraday 15-minute bars
I tried a little something different on the chart of the EMini in Figure 4a. We have been looking at the intraday ATR (Average True Range) in past commentaries and as one would expect it swings up and down with the beginning and end volatility of each day. For this figure, I multiplied the 14 bar average times 27 bars in a day, and used a 385 bar ATR average. From this you can see that the ATR is expanding. In effect I have put a daily ATR on an intraday chart.
Knowing that the ATR is expanding tells me that what I have been saying about the daily charts is a definite possibility. When the range expansion begins, we start to show parabolic movements and the market moves up very quickly. That's what I am expecting in the next few days--for the moves to quicken.
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:
0. 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.