The Sunny Side of the Street
MONDAY
NIGHT - July 14, 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:
- I am beginning now to watch for the 5th wave to start up anytime, so stay at the ready. When I see a firm move above 1005, I will believe the 5th has begun.
And today we had such a move. All the markets I watch were up, though the Dow was the least interesting. On the daily bars the Dow is just creeping along, the way it often does before a big NASDAQ rally.
The QQQ almost made it to the magical 33 I have been watching for weeks, but not quite all the way today. Maybe tomorrow.
Mid-day there was a hiccup in the markets with a notice coming out that any trades below a certain number were to be burst. Sounds like a hiccup in the electronics to me. The net result was to (a) scare some traders off and (b) to drop the market back down to where it came from.
I have a feeling that tomorrow will make up for the mistake by continuing the climb toward 33.
Average True Range (ATR) is fairly flat right now, keeping market moves near a predictable size.
RSI is still nicely bullish, staying in the upper half of the range, with its lows above 50 and its highs at and above 65. That still shows strongly for these markets.
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Figure 2a: SPY Daily
The SPY didn't reach up and touch any great new highs today, or even reach up much for any old ones. The mark from a month ago was a high of 102.10, so that is what we should be striving for tomorrow. The Sunny_Bands have flattened out to create a sideways channel for the SPY, but at least prices are still touching the top Sunny_Bands, keeping the buoyancy there and the hope of turning the bands on upward to follow the QQQ rally.
Figure 3a: QQQ Daily
As I said yesterday: "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."
Same goes for today, with the expectation of actually touching the mark before the end of the week.
Why didn't I say tomorrow? Because we could easily see a temporary setback tomorrow as the Mutual Funds react to today's knee-jerk glitch in the markets. That sort of technical pull back would not be surprising, but neither would it surprise me if it doesn't happen tomorrow.
Figure 3b: QQQ 15-minute intraday
Figure 4a: EMini 15-minute intraday bars
This is where the technical knee-jerk was most evident. Straight up and then straight down again, and then up, or down? I even got a call from my good friend Arch Crawford saying, what the heck just happened? He says he sees several technical aspects in the Zodiac this week following the full moon. So, beware. Arch is usually right.
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. This commentary still holds, a week
later.
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.