The Sunny Side of the Street
THURSDAY
NIGHT - July 10, 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:
- 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.
TODAY: The Dow opened at 9154, creating a 2 point gap on the opening Dow bar. The sharp drop continued with the first 15-minute bar closing at 9090, for a 66 point drop. The remainder of the day continued dropping until the Dow hit the 9000 mark, where it took a bounce upward. (Remember yesterday's comment about the 9000 mark.)
On the daily chart of the Dow this is looking like a pretty decent 4-wave drop, as I have been warning about for several weeks. Now it is happening. The market didn't make it to the 33 QQQ mark first, however, which is disappointing from a strength standpoint.
Only now is the Dow touching the Midline Sunny_Band, and that puts the indicator in neutral territory, not yet negative territory.
If the Dow bounces off the midline in the next few days that will be a great show of strength and the 5th wave should be strongly up. If it continues lower, we should hit the bottom band at about 8836 and take a bounce up from there.
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Figure 2a: SPY Daily
The SPY echoed the Dow (see Figure 1a), almost touching its lower Attractor which lies at 98.42. The SPY's actual low was 98.63, just a tad short of the mark.
The ATR is still slowly expanding, which makes me think that there are more players coming into the markets again.
The RSI continued its divergence with price on the SPY, speaking loudly for a continued move down tomorrow. That technical indicator alone tells me that the 4-wave is not yet complete.
Figure 3a: QQQ Daily
However, the NASDAQ is out-stripping the other markets (as it has traditionally done at new bull markets and at the end of bull markets), and today just barely moved back under the top Sunny_Band, but not by much. The daily chart of the QQQ is still very strong, and the Sunny_Bands_Pro indicator is still showing green bars.
Today's RSI gave divergence with prices, so it could be foreshadowing a move down yet to come on the QQQ, saying we are just beginning the 4th wave move on the QQQ.
Figure 3b: QQQ 15-minute intraday
Intraday the QQQ gave a gap down like the other indexes, and followed through the day with further downside activity, until it hit the Attractor at 31.44 and bounced upward.
The QQQ could go deeper, even to the Attractor at 28.31 and still be in proper 1-2-3-4 configuration. If it does that, it will be a great setup for a 5th wave long play.
Figure 4a: EMini 15-minute intraday bars
Today's EMini instantly dropped below the 1000 mark on the open, and continued to drop for most of the rest of the day. It bounced on the Attractor I had drawn at 982.50, taking the market down essentially 17 points. That's a pretty decent 4 wave, but we will probably still see 966 on the EMini before it's over.
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.