The T-line continues to act as an important factor in this market. The Dow and the S&P 500 are trading back below the T line, potentially creating an evening star signal if the markets close more than halfway down Thursday’s candle. The NASDAQ has open lower and is currently trading right at the T-line. It needs to close above the T-line to provide any indication the current bullish move/bounce is still in progress. Where the market closes today will be an important factor.
Today’s market consolidation has a different tone to it, the lack of wild oscillations. The T-line continues to act as a predominant factor. As long as the market indexes remain above the T-line, the uptrend is considered in progress. This means where the market closes today will be important. Crude oil prices have come back up strong over the past couple days, breaking out of the downtrend. Look for oil stocks as trades.
The major benefit of candlestick analysis is that it allows the investor to see what a trend/price would do with a high degree of probability. It will also demonstrate when there is no high probability assessment of a trend. That is currently what is occurring in these markets. There is no established direction. Any trading has to be done on the basis of quick profits off of short-term intraday charts. Otherwise, sitting and waiting for the market to sort itself out is the best strategy. Be patient, a trend will be established sometime in the future, two days or maybe two weeks.
Where does the market want to go? It doesn’t know either! Until the market settles down, moving away from huge whipsaw moves intraday, any trading should be oriented toward the 10 min. candlestick chart. Until there is a candlestick reversal signal, the downtrend remains in progress. Intraday buying requires confirmation going into the close. Trade nimbly.
Because prices/trends move based upon investor sentiment, it will be important to see how the markets finish up the day today. The major indexes are breaking down through trend support levels. A close at the top end of the trading range today, a hammer signal, would indicate the lower trend channel support level was going to continued active support. A close near the lower end of the trading range today would indicate investors have given up, the dumpling top breakdown would be in progress. Very few long positions should be remaining intact, only if they were not showing sell signals.
A broken record analysis, same old same old, the markets are still in a sideways mode with no direction. The analysis remains the same, any established positions should have good compelling charts. More than likely, the sideways/doldrums of the summer will continue for the next week or two until everybody gets back from their vacations.
After selling off hard this morning, the Dow is now trading back up at the top of its trading range, at the T-line. A hammer signal in the Dow would provide additional evidence the market is trying to base in this area. The NASDAQ opened lower but is now trading slightly positive, also indicating Bulls are stepping in in this area. Again, the markets are not showing any decisiveness one way or the other. Any trades still require close watching.