The Sunny Side of the Street
SUNDAY
NIGHT - August 10, 2003
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)
Figure 1a: US TBonds Daily chart
It seems to be all over the news, and what other commentators want to talk about, so let's talk about Bonds for a minute. Sunny_Bands and the Sunny_Dynamic_Moving_Average gave the sell signal right near the top of the move down, and now that rising interest rates seem all the rage, you can start figuring on taking some profits. Buy the rumor, sell the news. When everyone talks, it's time to get out. RSI is rebounding from a very low, low and price has taken a bounce. It's time to wait for more evidence technically.
Figure 1b: INDU Daily chart
The Dow, on the other hand, is right in the middle of the yellow box, neither high nor low. Volume has tapered off and RSI is right mid-stream. The only thing we can say for sure is that the closing price was above the Sunny_Bands midline, so that's a positive. We are thus now beginning the ninth week of sideways activity, which is to be avoided for long-termers and played intraday by the short-termers, as we channel back and forth.
Again, wait for the breakout one direction or the other before making your mind up technically.
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Figure 2a: QQQ Daily
The QQQ has been playing very differently from the
Dow, giving me the feeling that this is a foreshadowing of price action to
come. While not entirely out of the box, the QQQ has been heading more
downward than sideways, and is now beating at the door. Will it use
this support area for a bounce to continue sideways, or is it about to break
through and begin a sizeable drop? Watch carefully for the 29.74 area
to be broken.
Figure 2b: QQQ 5 minute intraday
The intraday QQQ is slipping quietly downward as the daily QQQ is nearing the bottom of the Sunny_Bands. It is beginning to look like it will push the bands further down, giving a short play for this week. Don't jump the gun, however.
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Figure 4: EMini intraday
And yet, the EMini is creeping quietly upward. This divergence in the markets makes me think something suspicious is ahead. When the like-markets disconnect it spells a storm brewing to me.
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. It has taken a bounce to come back up to that support level, which is now acting as resistance, and so far the short position is not playing out.
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.