The NASDAQ continues to show good solid uptrending. The Dow and S&P 500 remain consistently at the T-line area. There is no signs of bearishness in this market, expect a stable/uptrending market to continue. This is allowing the strong candlestick patterns such as frypan bottoms to continue to produce profits, i.e. KLIC and PAH. The biotech sector remains strong. Stay predominantly strong with long positions being targeted to the strong sectors.
It has been pointed out by a few new members that the big rally since election day, which had produced some very big profits because of the strong up move was not necessarily conclusive that there was any benefit to candlestick signals. But the revelation that strong profits are still being made even when the market has gone into a flat stage was more indicative of the information revealed in candlestick signals and patterns. This should be the underlying conclusion when understanding the benefits of candlestick signals.
The early selling in the Dow and S&P 500 continues to be offset by the slow consistent buying in the NASDAQ. Now with all the indexes trading positive, it clearly demonstrates there is not yet any dramatic change of investor sentiment, the slow bullish uptrend remains in progress. This allows the strong candlestick charts to continue to perform without the influence of any strong bearish sentiment participating in the overall market. Strong candlestick bullish patterns continue to produce good profitable trades.
Sectors are the main factors during this market trend. That is clearly illustrated by the fact that the Dow is down and the NASDAQ is trading positive. There is no change of investor sentiment in the overall market. But there are specific sectors that are showing strength. The easy candlestick scanning techniques allows investors to pinpoint which sectors are the strongest bullish sectors and which are the strongest bearish sectors.
The T-line continues to act as a strong support for the market indexes. The NASDAQ is showing the most strength as it is moving into new high territory. Strong candlestick signals are still showing where the high probability trades set ups are occurring. AMZN did a best friend signal yesterday with the trading moving up through the top of the wedge formation, a pattern breakout using the information provided by candlestick signals. Stay predominantly long with the anticipation of the indexes breaking into new high territory, a J-hook pattern indicating much more upside.
Although today’s positive trading doesn’t show any great resiliency, it is showing good bullish candlestick signals both in the S&P 500 and the NASDAQ. The NASDAQ is illustrating a bullish flutter kicker type signal. If the NASDAQ closes above the T-line today, it will be providing more evidence the slow steady uptrend remains in progress with healthy profit-taking occurring along the way. Trading strategy remains the same, stay predominantly long and remain short in positions that are not showing buy reversal signals.
After coming out of the chute with good strength today, the market indexes have backed off. Crude oil open strong but then had a major reversal. Although the initial strength of this morning has dissipated, the candlestick charts continue to reflect a major overall bullish sentiment. This was the attitude of the market trend prior to today’s new year trading. This merely reveals investor sentiment is continuing with the sectors that were acting well going into the end of last year. Although oil stocks have backed off today after trading higher, they still have not shown a change of investor sentiment. Investor sentiment still implies the strength that came from the results of the election is still the predominant force.
Although the week between Christmas and New Year’s does not usually have any relevant forceful moves, it does provide an indication of what might be strong going into the first quarter of the next year. Gold stocks are picking up steam, that becomes a viable sector to watch immediately after the first of the year. The bearish trading yesterday made the prospects of breaching the 20,000 level in the Dow more tentative. Investors became more discouraged the longer it took to get up through that level. This is a perfect illustration that prices move based upon investor sentiment, not fundamental reasons. Use the analysis of each individual stock chart to decide whether to remain long or short in specific stock positions.
Unfortunately the quest for breaching the 20,000 mark in the Dow is occurring during a time when there is not a whole great amount of investing occurring, the slow period between Christmas and New Year’s. Because investor sentiment is what moves trends, the lack of buying pressure at the 20,000 level may create discouragement that starts investors to take profits, further reducing the prospects of going through that level at this time. Currently the indexes continue to trade above the T-line. But be prepared to close out positions if the market starts showing definite selling, indicating the major hurdle at 20,000 is not currently going to be breached. However, it is still early in the day.