The T-line continues to act as an important trend indicator. But until the indexes close below the T-line, assume the uptrend remains in progress. When market conditions get into a state of a very slow trend one way or the other, that is when having both long and short positions in the portfolio becomes prudent.
The markets nature, a very slow steady uptrend, will probably not move out of that mode on the day before Thanksgiving. The market will be open on Friday for one half of a day. More than likely no major change of investor sentiment is going to occur either today or on Friday. Stay predominately long, especially in the biotech area. However, continue to have a short or two in the portfolio.
The Dow and the S&P 500 have pullback today to the T-line area. The NASDAQ has gap down from a Doji and currently trading below the T-line. A close below the T-line in the NASDAQ would diminish any upside prospects and would at best indicate a sideways wedge formation was in progress. That same prognosis would imply to the Dow and the S&P 500 if they close below the T-line today. The wedge formation would indicate a lack of direction in the markets going into the end of the year. Continue to have long and short positions in the portfolio.
Nothing has changed the current uptrend. A simple analytical tool is when witnessing the premarket futures opening relatively flat it implies there is not any major change of investor sentiment of the current trend. Currently the trend analysis remains very simple, the uptrend is in progress until there is a close back below the T-line. A J-hook pattern set up is in progress.
Today’s consolidation in the markets is not unexpected after a big move like yesterday. Watch to see if today’s trading creates another Doji day, providing the prospect for a another Doji sandwich set up for tomorrow. Currently the trend analysis is easy, stay long as long as the indexes do not come back down through the T-line. The transportation index is showing strength, implying this market is not backing off.
All the indexes are currently nudging the 200 day moving average today. This is creating bullish Doji sandwiches. The transportation index has moved up nicely through the T-line. These are all bullish indicators provided the markets close near the top end of their trading range and especially if they close above the T-line/200 day moving average resistance levels. Long positions should be watched closely today. If the market indexes start backing off from the resistance levels, make sure long positions are continuing to demonstrate strength.
The Dow, S&P 500, and the transportation index have now touched the T-line. The NASDAQ is trying to move to that area. It would now be important to see what the indexes do at this level. A failure, obvious selling from these levels, would indicate the bounce to the T-line has been accomplished. Any long positions should be watched to see if they are failing and any short positions should be watched if the market indexes are able to be pushed up through the T-line.
Be careful of the bounce, keep in mind, during an uptrend it is not unusual to see selling in the morning followed by the continuation of the uptrend later in the day. The same scenario needs to be watched in the current market trend, it is not unusual during the downtrend’s to see buying in the morning and selling in the latter part of the day. Before attempting to establish any long positions, wait to see if there’s going to be continued buying going into the close. The 50 day moving average still remains a viable target to the downside.
The NASDAQ is currently trading right on the 200 day moving average with stochastics still heading down. The Dow and S&P 500, after sell signals and a close below the T-line, did not use the 200 day moving average as support, making the 50 day moving average the next likely target. The trend analysis is very simple. Stay short until you see candlestick reversal signals.
Today’s selling so far has brought the Dow and the S&P 500 back down below the 200 day moving average, the suspected support level. With stochastics still heading down, it will be very important to see the indexes close back up above the 200 day moving average or else the 50 day moving average will become the next support level. It will be very important to be analyzing long positions at this point, making sure they do not have reversal signals and starting to close below their T-line’s.