The indecisive nature of the market continues, illustrated by the waffling/sideways trading of the indexes above and below the T line. Many people ask, “What does it mean when you see the waffling at the T-line? How does that help you?” The answer is very simple. It means there is no decisive direction in investor sentiment. Candlestick charts allow you to recognize when it is time to be long or short. Candlestick charts also tell you when there is no market trend, creating a different trading strategy. Either have both longs and shorts in the portfolio, or conserve your cash until the market shows a definite bullish or bearish price move. Currently, most bullish charts are not showing any dramatic upward price move, merely slow waffling uptrends.
Yesterday’s left/right combo in the Dow, after the previous day’s hammer/Doji supported at the 50 day moving average, made for very simple trend analysis. A positive open today would be confirmation of the left/right combo. This candlestick pattern produces a very high probability trend result. The confirmation of a gap up is a very strong indication investor sentiment is ready to take the market higher provided the markets close near the high end of the trading range today. Stay predominantly long. Expect more upside.
The market indexes are obviously not going up and they’re not going down, currently the Dow is trading slightly positive while the NASDAQ is trading slightly negative. The operative word is slightly. The Dow and S&P 500 are trading between the T-line and the 50 day moving average, sideways. The NASDAQ is trading just above the T-line but has an obvious resistance level at the recent highs. Until there is a major break one way or the other, each individual stock chart remains the prominent evaluation factor.
Today’s selling, taking the S&P 500 back below the T-line and the Dow showing that it cannot get up through the T-line, indicates more slow downside drift, making the 50 day moving average the likely target over the next few days. The S&P 500 and the Dow are showing a downward trend channel while the NASDAQ continues to trade sideways. This still puts the market conditions to where specific sectors/stocks should be analyzed on their own merits. The overall market conditions are not demonstrating any powerful bullish or bearish forces. Individual stock trends are showing characteristics of slow upward direction but with a lot of trend channel indications.
The weakness in today’s trading does not demonstrate any major change of investor sentiment. The slight selling in the indexes is not producing any reversal signals and the indexes are still trading above the T-line, the Dow trading right on the T-line. The lack of any major change of investor sentiment continues to make each individual sector/stock the main criteria. Stay long with a few short positions.
The current positive trading today indicates the Washington rhetoric is not deterring investor sentiment. The candlestick charts reveal that although bullish strength in the markets may not be overwhelming, at least it is revealing there has not yet been any change of investor sentiment. The uptrend remains in progress as long as the indexes continue to trade above the T-line. Today, the Dow is trying to climb up through the T-line.The current positive trading today indicates the Washington rhetoric is not deterring investor sentiment. The candlestick charts reveal that although bullish strength in the markets may not be overwhelming, at least it is revealing there has not yet been any change of investor sentiment. The uptrend remains in progress as long as the indexes continue to trade above the T-line. Today, the Dow is trying to climb up through the T-line.
With the Dow trading lower and the NASDAQ trading higher, this illustrates the markets are very sector specific. The biotech’s, as seen in LABU, continues to act very well. CARA, CLSD, EXAS continue to act very bullish. Stay predominantly long, with a few short positions in the portfolio, as long as the short positions are not showing any bullish sentiment I.E. UFS. Currently the market indexes are not showing any dramatic bullish sentiment or bearish sentiment, allowing each sector to perform. This is why it’s important to project price targets.
The NASDAQ is having problems getting through the T-line after yesterday’s bullish engulfing signal. The Dow is trading slightly positive but the big bullish indicator today is the transportation index trading positive, heading back up to test the T-line. Although there isn’t any rampant buying today, there isn’t anything to indicate any major change of investor sentiment, implying the markets may have found a support at the 50 day moving average yesterday. The prognosis remains the same, this market is sector specific. Biotech’s are acting well, hospital stocks appear to be picking up strength, semi conductors are showing strength.
The expected knee-jerk reaction to the cancellation of the health bill has taken the Dow right down to the projected target, the 50 day moving average. Although the market indexes are trading lower today, the NASDAQ, the S&P 500, and the transportation index are trading above where they opened. The Dow is trading towards the higher end of its trading range so far today. This implies the selling is not of a rampant nature. Numerous stocks that were trading in good uptrends last week opened lower today but now are continuing to trade positive. The markets continue to show continued strength in specific sectors. Have both long and short in the portfolio.
Today’s healthcare vote remains the prominent influence of the market movement. With the market not moving with any great decisiveness yet, each individual stock chart remains the predominant evaluation. Biotech stocks continue to act well. Gold stocks are attempting to hold up, oil stocks are still in downtrends. Each sector needs to be evaluated.