The Sunny Side of the Street
TUESDAY
NIGHT - July 08, 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 Dow finally touched the upper Sunny_Band, bringing it more in synch with the other indexes, and giving reason to expect continued upward movement tomorrow.
TODAY: The Dow opened at 9213 and closed at 9223, just about 10 points up, but the high for the day was 9236 and the low 9162. This configuration gives us a doji bar configuration for today, which from my viewpoint more than likely gives the markets a larger up day for tomorrow. Doji bars can mean either up or down, but usually a sharp move. Because I am still expecting the QQQ to hit 33, I therefore expect the Dow to move up in tandem.
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Figure 2a: SPY Daily
The SPY moved along sloppily today until the latter part of the day when it played catch-up with the QQQ. Prior to that it was just chopping along sideways. There is still nearby resistance at 102.10 that has to be broken, for the SPY to move on up to its 3rd wave goal of 104.84. The SPY just might take the lead tomorrow, pulling the other indexes up with it as it pokes above 102.10. Very often I see resistance broken sharply so I am expecting that from the SPY tomorrow.
Figure 3a: QQQ Daily
I still think the QQQ is headed for 33, the magenta line drawn in Figure 3a. If you look at the longer term charts you can see several places where 33 has been either significant highs or lows.
Figure 3b: QQQ 15-minute intraday
The back-sliding I anticipated in yesterday's commentary came early this morning and didn't go very deep, and certainly not down to the 31.44 level. However, it did keep up the run for 33 as it move steadily upward, ahead of the Dow and the SPY.
The Sunny_Bands_Pro indicator has been green for two days now, for a running 1.25 more points on the upside since turning neutral two days ago.
I still think we are going for 33, and with an ATR (Average True Range) of 0.76 it should take two more days to get there.
The divergence on the RSI, and especially with it being so high, is warning of an impending correction, but I don't think it will come until after the market meets the 33 mark.
Figure 4a: EMini 15-minute intraday bars
Today's move up on the EMini was evident only after the QQQ lead the way. In the beginning of the day the EMini was still playing tag with the 1000 line. But, as price touched the upsloping magenta trendline near the latter part of the day, prices decided to catch up. For the EMini to catch up with the QQQ in its run for 33, the EMini will need to go to 1014, before turning down for the correction already being signaled by the RSI convergence.
Figure 5a: EuroDollar Daily - Sunday night commentary only
The
current signal on the EuroDollar model is still short, with nothing yet to
confirm the signal. My interest in
shorting this market will only come if the EuroDollar drops below 98.88.
Until then, I stand neutral.
Stay sharp and on your toes. Moves can reverse on a dime, anytime. Let the market speak to you. If the market is going down, by golly ignore my commentary from the night before and know that the market is going down.
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.
5. This commentary is for educational purposes only, and is meant only to teach readers about my indicators, other technical indicators, and how I read them.
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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.