Today’s trading continues to reflect that there is no bearish investor sentiment coming into the markets yet. This means that each individual stock/sector should be analyzed based upon their own merits. A slow steady market uptrend is now going to produce profit-taking in sectors that have moved well. This usually implies the sector rotation, making good profit potential starting to occur in new sectors. Stay predominantly long until there is a definable candlestick reversal signal in the indexes.
The indecisive potential reversal signals of yesterday are experiencing weakness today as potentially anticipated.
The nature of today’s selling is indicated by the signal/formation today. Currently the indexes are showing indecisive selling, Doji days. The index that should provide the most valuable information today is the NASDAQ. It gap down below the T-line after yesterday’s left/right bearish combo. The NASDAQ is trading lower but above where it opened, illustrating buying is still present. However, it is currently trading at the T-line. It will be important to see if the NASDAQ and close backup above the T-line.UCTT is still confirming the scoop pattern breakout. AAOI should now be watched for profit-taking sell signals.
Although there is not yet any consistent selling in all the market indexes, there are signs of profit-taking. The NASDAQ clearly illustrates profit-taking approximately every 4 to 5 weeks. The current signs of weakness does not necessarily mean the overall uptrend has reversed, merely profit-taking/pullback to the T-line area is in progress. Crude oil is trading higher, creating strength in the oil stocks. Gold is trading higher adding strength to the gold sector. Sectors/individual stock charts remain the prominent criteria.
The lack of strength in today’s markets is not yet any indication there has been a change of investor sentiment, however the hard selling in the transportation index is the first signs that bullish sentiment may be waning. A trend channel is becoming more evident in the transportation index, especially after some obvious candlestick sell signals that have developed over the past few days of trading. The overall trend of the markets has not yet been altered, but be ready to take some profits on signs of weakness.
Numerous talking heads, on the TV financial stations, are expecting a pullback in the market. This is usually a good sign the uptrend is still in progress. Numerous bullish chart patterns are being formed, J-hook patterns and frypan bottom breakout’s. Continue to utilize the strong patterns. But be careful, keep in mind, profiting from a bull market does not mean you have become smarter.
Today’s profit-taking has indications of merely profit-taking. Currently the major indexes are trading at or above where they open, revealing that there is still buying occurring in the markets. It will not be unusual to see some backing and filling on a Friday before a three-day weekend. The important factor be to see if there is any indication there has been a major change of investor sentiment. If not, the uptrend in these markets continue to move in a bullish direction.
Today’s backing and filling does not show any dramatic change of investor sentiment, merely profit-taking. The NASDAQ is pulled back and just touched the 3T line. The Dow almost hit the 3T line before starting to move up off the lows. Expects some profit-taking but unless there is an actual candlestick sell signal, the uptrend is still in progress.
The slow steady uptrend of the market continues to produce big profits from J-hook patterns and frypan bottom breakout’s. Crude oil inventories are up again, probably keeping crude oil prices in check. That sector may not have great movement, but the strong sectors can be easily identified. LABU continues to indicate the biotech’s are acting well. Mining stocks continue to act well. As long as the market does not show any major reversal, there are strong profits being made in the strong sectors.
Currently the markets are demonstrating a consolidation day. The selling is very light, not moving the indexes with any obvious force. Numerous individual stock prices are waffling today, without any major direction. This is a good day to illustrate candlestick chart patterns that are indicating a reversal move may not necessarily confirm on the very next day, but watch for the trend to confirm on the next day or two after the reversal signal. IE TGH, AAOI, INFN.
The potential breakout of wave to was evident with a gap up on Friday into new high territory, especially on the Dow. Today’s positive trading is just continuation of a new wave three potential. As long as investor sentiment continues to move the overall market in a general bullish direction, the high profit candlestick patterns, the breakout patterns, can be exploited for very high profits. That was the purpose of recommending INFN and AAOI today. Knowing what the overall market direction is doing allows for candlestick investors to exploit the high profit trades.