Today’s positive trading in the markets is creating a MorningStar signal in the Dow and the S&P 500. However, the T-line is still a factor. Today’s potential reversal signal requires strength going into the close. Until then, the trend still has to be assumed to be in a downtrend until the candlestick reversal signals are confirmed with closes above the T-line. This is all occurring with stochastics in the oversold condition. Short positions will need to be addressed by the end of the day.
Today’s balance/positive trading should not be unexpected after the large selloff yesterday in the markets. However, although stochastics are already in the oversold condition, any buying in today’s positive trading should be done with the realization that long trades might have to be closed out immediately if the markets continue to selloff. Today’s positive trading, currently forming a bullish Harami, will require bullish trading going into the close. The markets could be reversing but today’s potential signal needs confirmation tomorrow.
The downtrend remains in progress, the T-line continues to act as the confirmation of the evening star signal in the Dow last week. Continue to stay short, the biotech’s remain weak. The bearish left/right combo that formed in the NASDAQ on Friday is confirming with lower trading today. This would imply a possible test of the recent lows. Stay predominately short.
The prognosis remains the same, the downtrend remains in progress until there is a candlestick reversal signal. The breakdown through the uptrend in support level and trading below the T-line puts the Dow chart with good prospects of having another downdraft like we saw four weeks ago after the breakdown from the dumpling top. The NASDAQ continues to trading down with gap downs, demonstrating strong selling pressures. Stay predominantly short, any long positions should be remaining above the T-line.
Today’s trading will probably be a little bit lighter than normal due to the Jewish holiday. However, a simple trading parameter remains in effect. As long as the indexes do not close back up above the T-line, the downtrend remains in progress. Stay predominately short with the prospect that wave three to the downside maybe starting.
The Evening Star signal of last week in the indexes continue to be the predominant indicator. Today’s lower trading indicates the T-line is not going to act as a support area. The gap down from the bearish signals and the NASDAQ show good strength to the downside. Any long positions that are not showing strength against this downtrend should be closed. Short positions should be added to the portfolio with the prospect of the markets going into a wave three to the downside.
Today’s positive trading puts the Dow and the S&P 500 just above the T-line, currently creating a bullish Harami. The NASDAQ, after a shooting star failure at the 50 day moving average and closing on Friday back at the T line area, is trading positive today providing a potential of a bobble pattern as long as the NASDAQ closes above the T-line. It will be important to see the Dow and the S&P 500 close above the T-line to indicate the uptrend is remaining in progress, although it should be a very slow uptrend. Continue to have both long and short positions in the portfolio.
Yesterday’s shooting stars in the indexes created probabilities that profit-taking would be occurring today. The most compelling factor was the NASDAQ creating a shooting star, failing right at the 50 day moving average. Today’s selling should continue to be viewed as profit-taking versus a full-scale reversal based upon the fact the NASDAQ is trading positive from where it opens today. This illustrates that buying is still continuing although the markets open lower. The Dow and the S&P 500 need to close above the T-line today to show the uptrend is still in progress, albeit very slow.
After breaking out of the wedge formation, the uptrend will remain in progress as long as the markets continue to trade above the T-line. The T-line remains a very important factor. AERI is a perfect example of why you want to stay long in a frypan bottom pattern unless there is a close back below the T-line. The combination of candlestick signals and patterns, and the T-line, produce extremely high probability/high profitability trade setups. The oil sector is showing strong buy signals. Stay predominantly long, any short positions should be compelling at this point.
Yesterday’s trading took the indexes up toward the top of the resistance levels. Today’s indecisive trading illustrates IF the uptrend is in progress, it still does not have any powerful conviction as of yet. Obviously the long positions should have more weight in the portfolio. Any short positions in the portfolio should have compelling weakness, no potential candlestick buy signals. Crude oil trading positive today is creating a bobble pattern, watch the oil stocks.