The Sunny Side of the Street
THURSDAY
NIGHT - August 7, 2003
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)
Figure 1a: INDU Daily chart
Kind of an amazing day today. The NASDAQ was straight sideways while the Dow and the S&P actually climbed upward. That's no excuse, however, as it still didn't get out of the box. While intraday player of the SPX and the INDU had a little room to maneuver, long-term players are still on the sideline wait for a word from the market as to true trend.
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Figure 2a: QQQ Daily
On a daily basis the market started and stopped at
about the same place again. Intraday it couldn't have been much more
sideways. In fact, it left us with a doji bar for today's performance,
which could mean some volatility for tomorrow.
Figure 2b: QQQ 5 minute intraday
The intraday QQQ made a play for the 29.32 Attractor today, with today and yesterday both showing below the box. RSI is near the bottom of the neutral zone and could go lower. While the EMini made it look a bit like the good ole' days today, the QQQ makes it seem like we are still in for some more sideways action.
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Figure 3: SPY daily
Even though it was an upday in the daily SPY, it still touched the bottom of the box and is still below the midline Sunny_Bands. That doesn't speak highly of any strong upward moves, but rather speaks to continued sideways motion.
Figure 4: EMini intraday
On an intraday basis, the play for the day was long the EMinis. The NASDAQ has been the leader, or so it would seem, for months, with higher volatility until today.
The EMini is now at the top of the 15-minute Sunny_Bands, although it scares me that the SDMA is so flat. That doesn't usually call for an up market, unless we are about to have a breakout.
The RSI on the intraday EMini is about midway, leaving room on the upside for more movement tomorrow. Since tomorrow is Friday, my guess is there will be some short covering before the weekend, which will cause another up day in the market.
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.