The Sunny Side of the Street
WEDNESDAY
NIGHT - August 6, 2003
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)
Figure 1a: INDU Daily chart
Nothin' from nothin' leaves nothin'; you gotta have somethin', if you wanna play with me.
The lows on the Dow today touched the bottom of the box, so that leaves some potential for tomorrow's trading. But for today, the move was Dow opening at 9032 and closing at 9061. Not enough room to catch a trade. (Unless you were very fast and caught a few cents on the downside and then a few cents on the upside. But, in my estimation it wasn't worth the risk.)
However, now the RSI is nearing the bottom of the zone on many charts, including weekly and monthly charts, showing that we could be soon coming up for a spring upward.
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Figure 2a: QQQ Monthly
The QQQ stayed in the yellow box on the Daily chart, too, also touching the bottom edge, so I though I would take a look at a different chart and see shat the Monthly looked like.
You can see that price is steadily climbling slowly up the trendline, but that the ATR is very low and it is happening very slowly. So, a very long-term play would be to hold long until the Sunny_Dynamic_Average crosses back the other way and just relax and wait--for a long time.
Figure 2b: QQQ 15 minute intraday
YESTERDAY I SAID:
- On the daily chart it looks like the QQQ will go on down to 29.32 tomorrow to meet up with the next Attractor. That should take the RSI below the 40 level and into oversold territory from whence it can then take a bounce.
So today's intraday QQQ went down and touched 30.10, not quite to the next Attractor, but nevertheless down. Then it bounced, with the RSI low and the Sunny_DMA_Histogram turning over into buy position.
At about the top of the move we got a SDMA buy signal which was never executed because price didn't rise above the buy signal high. And, the market just turned around and went back down. If you could have taken any trade today, that would have been the one, but it was only for a few cents and I didn't think it worth the risk.
Figure 3: SPY daily
The daily SPY also touched the bottom of the yellow box today with the RSI below 40, telling me that there is another sideways day ahead, or a bounce. It's hard to tell. I'm going to be ready for a bounce with close stops, and even be on the ready for the bottom to fall out if the lower level of the box is penetrated.
Figure 4: EMini daily
The EMini is playing the same game as the SPY, as it should be. The range in the EMini is from 966 to 1011, and the Sunny_Bands continue to move straight sideways.
Watch carefully for the 4-wave to begin to reveal its end when the bands begin to show a direction. It could be a couple more weeks before the turn, so don't get impatient.
The RSI is now down at the lower level, so we could have an extended sideways move, or a bounce could be eminent.
Figure 5a: EuroDollar Daily - Sunday night commentary only
The current signal on the EuroDollar model is still short, but now at last we have the breakthrough we have been waiting for to confirm the signal.
The ED dropped below 98.88 on 7/31, which was the time to actually believe the short signal and make a move.
The next Attractor is now down at 98.7, which could be a nice profit taking opportunity. Why? Because the RSI is so low that I would expect a bounce when that level is tested.
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.