The Sunny Side of the Street
WEDNESDAY
NIGHT - July 16, 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:
- One or the other of these Attractors must be broken on the SPY before I will believe we are moving anything other than sideways.
And today again we essentially moved sideways. The Dow opened at 9133 and closed the day at 9094, moving down just 39 points. The ATR at the moment is 129, so the move for the day was just about 1/4 of the expected Average True Range for a day. Not much to write home about.
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Figure 2a: SPY Daily
The RSI on the SPY is showing some negative divergence, which usually means the market is due for a correction. Here I think I am getting a different message, however.
I say this because of the intraday charts, which you can see in Figures 3b and 4a. Notice there that the RSI is beginning to show POSITIVE confirmation. That is, the bottoms on price are beginning to move upward and the bottoms on the indicator are beginning to move upward. But, better yet, the turns on the bottoms of the indicators are beginning to turn steeper than the price turns, so I find that encouraging.
Figure 3a: QQQ Daily
I was asked today on Ike Iossif's MarketTV whether I thought the market was healthy at this point, and I said yes. I believe that the QQQs move up with some power, in the face of the Dow and SPY moving sideways is a healthy sign. Most often this has happened in the past when the other market indexes are slow to follow, but nevertheless do follow the NASDAQ's lead.
Figure 3b: QQQ 15-minute intraday
Today the RSI bounced off of the 40 mark, the lower bullish line, and the intraday QQQ broke the downsloping trendline that it has been following for the past 2.5 days. That is a bit of a bullish sign as well, and I expect tomorrow should show some bullishness.
Figure 4a: EMini 15-minute intraday bars
The EMini also broke (though just barely) the downsloping trendline with a little lilt at the end of the day. The steadfast refusal for the market to move below the marker at 987.74 was an encouraging sign, which should show some upward activity tomorrow.
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.