The Sunny Side of the Street

THURSDAY EVENING - August 21, 2003
Archives of Past Commentaries  .  How Did We Do?

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

While it was basically another sideways day, at least the markets ended up a tiny bit over their opens.  For the wild and skilled traders there were three possible trades today on the QQQs, which I'll talk about in the next section.  You can see from the top chart that all three markets followed in synch today.

The daily QQQ hit the overhead Attractor today, but did not push through it.  The line at 32.79 was penetrated slightly with the high for the day of 32.82, but the close was at 32.64.  Now for the exciting part: will the market push through the mark over the next few days, or will it reflect off and tumble back down to continue trading the range from 29.52?  Be nimble and ready to move either direction with a buy stop above 32.80 and a sell stop below 32.47.

Figure 2b: QQQ 15-minute Intraday

For expert scalpers there were three moves to catch today.  The move from the open to the high was worth 25cents; the short from there down to the low was worth 50cents; and the subsequent move back up for the remainder of the day was worth 35cents.  That's a big IF, of course: if you could catch the highs and the lows.  How would you know?

The EMini pushed through the Attractor at 1004, by jumping up with a gap opening.  Except for the gap at the open today there wasn't much room to play -- unless you are an adept scalper.  If you scalp, then there were three very quick plays to pull off a few cents; but, if you are a normal day trader, there wasn't much to do today except hang onto the long position from 8/12/2003.  Nevertheless, the jump over the 1004 mark, and the fact that the market played with that line for the rest of the day, are positive in my book.

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.