The Sunny Side of the Street

SUNDAY NIGHT - July 13, 2003
Archives of Past Commentaries  .  How Did We Do?

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.

This must indeed be the choppy 4-wave I have been warning about, because the only way to trade it is with the conviction of a professional.  Friday's bar may have opened on its lows and closed on its highs, but it wasn't very impressive.  The opening on the Dow was at 9036 and the close at 9119, for an 83 point spread.  And, it left us with an inside day formation, with yesterday's bar both higher and lower than today's.  So the Dow ended the day up 83 points.

The bar is now sitting straddle the Sunny_Bands midline, over it and under it, but the bars are still green.

It can go one of two ways from here: up or down.  We are already going sideways.  The Sunny_Bands are still in Long configuration, with the gold line above the purple, so followers are either still long since March or are on the sidelines since 623/2003.

The SPY  actually moved upward, while the Dow only created an inside bar.  This is the way of sideways markets.  Looking back at former commentary, I suggested this sideways configuration quite some time ago, from which I expect a 5th wave to move on upward in the near future.  The 5th wave should touch the 104.84 mark on the SPY.

The RSI on the QQQ charts is remaining nicely in the upper portion of the "above 40" range, denoting continued upward movement in store.  The long-range QQQ continues to be bullish, and though choppy, I still expect to see it touch the 33 mark.

Figure 3b:  QQQ 15-minute intraday

Even though the intraday QQQ touched down to the 31.44 mark in the trading session before last, in this last trading session it just floated sideways along the 31.77 mark.  With the daily chart being overall bullish, my guess is that the trading session on Monday will take the QQQs up 1 ATR from here, to 32.10 or so.  Nothing very exciting takes place in a sideways correcting 4th wave.

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.

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.