The Sunny Side of the Street

WEDNESDAY NIGHT - July 23, 2003
Archives of Past Commentaries  .  How Did We Do?

Figure 1b: INDU Daily

LAST TIME I SAID:

 

(SPY) The model SDMA is now long, though nothing real exciting.  Tomorrow and the following day might give a little excitement as the Attractor overhead at 993 just might pull the market on up a bit higher.

TODAY:  Up about a half percent again for the day, the Dow opened at 9159 and closed up 35 points at 9194.  Again, as far as my analysis goes this isn't much of a move.  The market is still hanging out between the two Attractors and not breaking out either side, as far as the Dow is concerned. 

Yet, remember that this is only a collection of 30 industrial stocks, and when we enter an new bull phase it is likely not to be the industrial giants that lead us out of the bear.

For movement in the early phases, look to the SPY and the QQQ.

This chart, too, is looking a bit sluggish, with the SPY lagging right on the SDMA midline of the Sunny_Bands.  The market is still flat, even though intraday it seems to move a bit. 

I am watching the top band and bottom band for the market to make a touch before deciding that it is no longer flat.

With the bounce off the Sunny_Bands midline clearly evident, it now looks like the QQQs could be trying another run for the 33 mark.  Keep watching this one for the next week or so.

Figure 3b: QQQ 15-minute IntraDay bars

Today's movement was to be found on the QQQ chart.  My SDMA (Sunny_Dynamic_Moving_Average) gave a buy signal yesterday, which held even through the down part of today, and is still holding long as the market continued to rise in the afternoon.

RSI did take that bounce off of the 40 line, which is indeed a bullish sign.  The little move this afternoon put RSI back in the overbought territory, but I think there is another day of up market yet to come before the RSI is seriously overbought.

"The Attractor overhead at 993 just might pull the market on up a bit higher," was my quote from yesterday.  And today it did just that.

Tomorrow I expect a bit more of a push to the upside, although I don't know whether it will last all day. 

The current signal on the EuroDollar model is still short, with nothing yet to confirm or deny 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, three(!) weeks later, with the ED moving ever so slowly sideways.

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.