The Sunny Side of the Street

WEDNESDAY EVENING - August 20, 2003
Archives of Past Commentaries  .  How Did We Do?

Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)

The Dow opened and closed at the same place, as did the S&P.  But, the QQQ made some movement worth a few bucks if you could catch the bottom and top.

I entered first thing in the morning and exited near the top at one ATR from the low entry.  That seems to be about all the market will give up lately, so when I see it I take it.

The QQQ dropped on the open, in response to the RSI divergence, and then climbed 1 ATR before drifting back down to the Attractor at 32.27.  The time for taking profit was at the top of the range when you saw 1 ATR added to the low.  It doesn't give much room for maneuvering, but at least it's something.

The RSI was relieved of pressure today by the drifting down of price, going back to the Attractor.  The leaves room for tomorrow to react to the back to back doji days on the Dow and S&P.  I still expect the EMini to reach 1004, which gives both the Dow and the QQQ a little room to move on upward.

The EMini was in effect flat today, with very little room to pick off even a small trade.  The Sunny_Bands are flat, but the price action is on top of the midline, so I am still expecting some show of strength in the near future.

I believe we are working on the 5 wave, so it won't be a long, nor strong move, but should nevertheless be a nice upward move.

This commentary is meant only for EDUCATIONAL PURPOSES. It is to help you see how a Technical Analyst reads the signs in the markets. 

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.