Today’s current buying needs to be seen going into the close. However, the overall trajectory of the market, especially in the Dow, looks like a slow drift back toward the 50 day moving average. This sideways/slow downtrend coincides with the summer doldrums. This week, more than likely, will maintain its indecisive trading. Next week, when everybody is back to their desks, the market will more likely start showing decisiveness.
Thursday’s Doji in the indexes gave a good trend analysis tool for today’s trading. The positive trading, after Yellen’s announcements, continues to reveal the sideways trajectory of the market. Had the markets opened lower today, the probabilities of a downward trajectory was much greater. Currently the Dow and the S&P 500 and the NASDAQ are forming Morning Star signals, producing the prospects of a mini scoop pattern. This would imply a possible slingshot effect to the upside if the markets close near the high end of their range today. Continue to stay predominantly long, having a few short positions in the portfolio.
The general market is drifting sideways, not showing any direction. However, the biotech sector is still allowing for big profits. PBYI, SRPT and ENDP have produced very good candlestick patterns, frypan’s and J-hook’s. These market conditions warrant having trading funds in very specific sectors. Fortunately, candlestick charts allows for immediate graphic identification of where the money is going.
Today’s early selling did not amount to much, continuing to indicate there is no dramatic selling pressure showing up in this market. Likewise, there is no dramatic bullish pressure either. However, this still makes for identifying which sectors are acting the strongest. The biotech area remains strong. The drug delivery stocks are also gaining strength. The candlestick charts will demonstrate where most of the buying interest is occurring, especially in lethargic/sideways markets.
The nature of the market remains consistent with the current trend, no major buying pressure or selling pressure signals. The lethargic the summer doldrums uptrend remains in progress. Continue to trade the strong bullish patterns. As long as the market indexes continue to trade above the T-line, the uptrend remains in progress.
The markets are continuing their obvious summer doldrums, no direction. Continue to stay predominantly long but there are short positions that are working well in these market conditions.
The T-line continues to act as a support level in this uptrend. Currently, the low of the Dow today bounced off the T-line. The uptrend remains in progress as long as the indexes continue to close above the T-line.
Markets continue to show the lack of conviction one way or the other. These market conditions make for high profit patterns very viable trading opportunities. Candlestick patterns reveal investor sentiment that has very little to do with the overall market direction. This was illustrated in our recommended position in SQ today, the results of a frypan bottom. Continue to stay predominantly long until there is a confirmed reversal signal in all the indexes.
The aggressive selling of yesterday is not following through today. Currently the NASDAQ is supporting on the T-line, the transportation index is supporting on the 200 day moving average. The Dow and the S&P 500 are just getting to the oversold conditions, but they are still trading below the T-line. This continues to demonstrate the summer doldrums syndrome. A number of positions have been closed out based upon a close below the T-line. Until investor sentiment shows conviction one way or the other, sit back and relax.
The profit-taking is now obviously more pronounced. The previous uptrend in the NASDAQ had been offsetting the indecisive selling in the Dow. Today’s trading has both the Dow and the NASDAQ trading lower. Currently the NASDAQ is trading right on the T-line. It will be important to see whether the T-line holds. If the markets close near the lower end of their trading range today, especially the Dow, expect more pullback. The transportation index is currently pulled back to the 200 day moving average. That index needs to support of the 200 to keep the rest of the markets from heading lower. Any long positions that are showing trading below the T-line should be closed out at the end of the day. Continue to have short positions in the portfolio. Gold stocks continue to act strong.