The Sunny Side of the Street

MONDAY EVENING - Oct 27, 2003
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One more night, they tell me, and my TradeStation will be up and working again.  In the meantime, let's try to make do with some Yahoo charts.  Given, they're at a distance, and pretty difficult to get values off of, but it's better than nothing

The intraday chart in Figure 1b, pretty much looks flat, after an early morning stretch to 1890 in the NASDAQ.

Figure 1b: NASDAQ vs QQQ one day, intraday chart

Figure 1cd: QQQ Intraday (Today)

The red, dashed line across the chart is the zero-percent line, or the close from yesterday compared to the close of today.  Looks about like 0 all the way across to me.  The high of today was about 34.45, with the low at about 34.05, giving us a range for today of about 0.40 points.

Figure 1d:  QQQ w MACD and RSI

The RSI is down in the middle range showing divergence from the tops on price versus the tops on RSI.  This calls for a move on downward over the next few days as RSI moves to the 30-40 range and price follows it on down.

You can also see on the chart in figure 1d that the MACD is in divergence with price, and that again calls for downward movement soon in the price activity.

I can't draw Attractors on these chart, like I do with TradeStation, so I'll just eyeball it.  It looks like the next Attractor down is at about 32, where the tops touched on about the first week of July.  Give it a week or so and QQQ should be in that range, along with the other indexes that all follow the same patterns.

Figure 1e: QQQ vs Dow vs SPX

In Figure 1e you can once again see how the chart of these 3 trading vehicles pretty much follow along the same pattern.  The NASDAQ QQQ generally takes the lead (whether it's up or down), but the all three have the same shape.

Attractor:  a level to which prices seem to be drawn, like a magnet.  Usually these are lines of support or resistance from previous highs and lows, but can also be an important level on an indicator, or the edge of a Sunny_Band.

PHW:  Potential Hourly Wage.  A term coined by Sunny to examine whether trading for a living is really worth it when compared to the minimum wage standard.  Before considering a trading system to be a success, it should pass the PHW test.

RSI:  Relative Strength Index (TradeStation function)

SDMA:  Sunny's Dynamic Moving Average (proprietary)

Shooting Star: A candlestick pattern discussed further under Reference, Candlesticks.

SDMA_Hst:  Sunny's Dynamic Moving Average presented in a histogram format where the line representing the difference between the two SDMA lines turns from red to green when the two SDMA lines cross each other (the difference is zero).  The yellow line is an average of the histogram line.

Sunny_Band:  Sunny's Dynamic Moving Average plus 1.5 ATR and minus 1.5 ATR, creating a band on either side of the SDMA.

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.