The Sunny Side of the Street

WEDNESDAY EVENING - August 27, 2003
Archives of Past Commentaries  .  How Did We Do?

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

The negative divergence between the RSI and price on the Dow is holding down the upward movement that we reported on the QQQ today.  In Figure 1 you can see that the blue line (NASDAQ) took off and exceeded any movement on the Dow, while the Dow pretty much stayed at 0% for most of the day.

Yesterday I said: "This signal did get higher closes after the signal was given, so it looks like a safe entry."  And today the market continued its move even higher.  Intraday the high on the QQQ was 32.83.  That high surpassed the Attractor at 32.69 and then fell back slightly to test the Attractor again.  The test held firm and the market continued to climb.

These sure aren't the old days, when a move would be 10 points on the QQQ instead of 1 point.  But, there is a certain finesse to playing today's markets that makes it a real challenge.  You have to expect smaller moves and take smaller profits within trades, but the market still behaves the same, just in much smaller measure.

Figure 2b: QQQ 15-minute Intraday

On the daily chart I have marked the Attractor at 33.32 and on the intraday chart at 33.33.  Close enough.  That's where I think the markets will go tomorrow.

When it gets there, however, I fear it will be a difficult challenge to surpass, even though ultimately I am looking for the QQQs to get to 36.97.

Last night I said: "I think tomorrow is to be another up day, with the Attractor at 999 being the play for the day.  With the ATR being only 2.36, the EMini will probably only make it half way there in a single day, but that's where it seems to be headed."

And, today the high on the EMini was 997.75.  It is still headed for 999, and with the ATR at about 10 points on the daily chart it should be able to make that mark by tomorrow intraday.

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.