The Sunny Side of the Street
TECHNICAL ANALYSIS EDUCATION: EXPLAINED AND DECIPHERED FOR NEW AND
VETERAN TECHNICAL ANALYSTS ALIKE.
MONDAY EVENING -
Sept 1, 2003
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Figure 1a: COMPARISON: DOW vs SPY vs NASDAQ (Intraday)
Figure 2a: Dow Industrials on a daily basis
The Dow is now back above the critical
testing at 9345, heading back for the Attractor at 9500. The high of
last week will serve as resistance (or the Upper Attractor) pulling price
upward to see whether it can surpass that mark. I think that the
market has put in a funny sideways rising 4th wave and is now working on the
5th wave up, which should take the Dow at least to 9802. How long?
Well, we are moving at an ATR of about 90 points per day right now, so it
could take as little as 3 days, but more likely two weeks to get there,
considering that there will be both ups and downs along the way.
Figure 2a: QQQ Daily
The QQQ has met and surpassed the 33.32 mark now, which is very encouraging. Same case as I just made for the Dow, holds for the QQQs. On this one, however, I expect the Attractor to be a bit higher mark, and for the QQQ to go as high as 36.97.
Figure 2b: QQQ 15-minute Intraday
The markets might put in a day or two of pullback here for the next day or two, as (a) we have been climbing steadily for some time and (b) RSI could use a rest and drift back down to about 40 before the impending rise comes.
Figure 3a: EMini Intraday and Daily
Last night I said: "Tomorrow will likely be one more upward day heading for the Attractor at 1010. Then we should see a little bit of downward action after that, testing each of the attractors that the markets have just exceeded."
Well, it headed for the 1010 mark, but made it only as far as 1008, which is still pretty good! I still think it is about time for the excess to blow off a little steam and drift down, or at least sideways, for a few days to allow the RSI to make it back down to the 40s, before putting in a big push upward to the next level attractors. When the engine gets rolling again, it should run up to about 1041, so don't run away scared when it begins a little pullback. That's just part of the nature of the beast.
Figure 4a: US TBonds, Daily
The sinking is slowing, and now creating a
rolling bottom, with RSI recovering from its depths back into the 40 range.
Bonds could logically go sideways for several weeks rather than turn on a
dime and go back up. That's my view.
Figure 5a: EuroDollar Weekly
The long-term nature of trends in currencies
still has us short the Euro. Bit by bit it keeps drifting on downward,
but nothing in a hurry. In the general nature of currencies, this
trend is taking a long time to get established and a long time in the
trending.
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.
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.