The Sunny Side of the Street
MONDAY MORNING - August 18, 2003
Archives of Past
Commentaries . How Did We Do?
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)
Figure 2a
You can see that yesterday and the day before on the chart above, that the close and most of the bar on the daily Sunny_Bands (Bottom subgraph) was in the upper half. That's a strongly positive sign, and this morning's market is proof enough. As I am writing this the QQQs are drifting sideways and it is too soon to tell whether we are in for a pull back or further aceleration.
Note the magenta horizontal line I have drawn on the most recent previous high. It exactly meets where this morning's market hestitated. RSI is very high, so I expect a bit of a pull back in the near future, followed by a move higher.
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.