The anticipation of tax reforms apparently is keeping good strength in the markets. The frypan bottom patterns are working extremely well in these market conditions, i.e. CLF. The uptrend remains in progress as long as the indexes continue to trade above the T-line. Stay predominantly long but watch for profit-taking/rotating in specific sectors.
Currently the market indexes are not showing any buying or selling pressure that would not be normal for a slow uptrending market. A solid uptrend usually consists of selling in the morning and buying later in the day. Gold stocks still remain extremely strong. There appears to be as many stocks trading higher as trading lower, indicating there has not yet been any major change of investor sentiment. Stay predominantly long.
Nothing has changed, the market uptrend remains consistent. The indexes have the potential of breaking out into a new wave three, providing the prospects of another strong uptrending rally. These market conditions allow for just maintaining uptrending stocks, steady eddies, that remain above the T-line.
The markets are trading relatively flat. However, the candlestick formations illustrate buying from where the markets opened today. This may not demonstrate any powerful bullish strength, but it does reveal there is not any confirmed selling. The T-line continues to play a critical factor in both the trend of the indexes and current uptrending stocks. Stay predominantly long until there is evidence of a compelling reversal signal in the markets.
The appearance of indecisive trading in the indexes over the past few days provided important information. Support levels/trend channels had not been breached. The T-line was still fairly close to the trading range. Today’s positive trading has brought the Dow, S&P 500, and the NASDAQ back up above the T-line area with significant strength. As long as the market indexes do not demonstrate a severe selling reversal today, the slow uptrend is still the main trend assessment. Continue to utilize the candlestick charts to indicate which sectors remain the strongest.
The lack of decisive direction in the market indexes continues to allow good candlestick chart patterns to progress. The markets remain very sector specific. Gold stocks acting well today. LABU is currently nudging the upper resistance level. NVRO has shown strong confirmation of a J-hook pattern. As long as the indexes demonstrate that there is no change of investor sentiment, the sideways/slow uptrend of the markets remain in progress.
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A downtrend usually consists of buying in the morning and selling in the afternoon. Today’s positive trading has diminished greatly. It will be important to see if there is any strength in the markets going into the close today. If so, it would illustrate a lack of direction/force of investor sentiment, implying the sideways or slow uptrend of the market had not changed. The mixed direction of the overall market is illustrated by just as many positive trading charts as bearish trading charts. This is making the markets very sector/stock specific.
With the market indexes closing at the T-line yesterday, as mentioned yesterday, a simple trend analysis technique could be applied to today’s trading. The uptrend required a positive open. Today’s lower open indicated the T-line was not acting as support, more downside would be expected. The selling is being blamed on all the political rhetoric but realistically the markets have taken profits approximately every 30 days during this previous uptrend. Take profits on positions that are showing sell signals and closing below the T-line. Gold stocks continue to act strong.
The lack of urgency in today’s trading implies the markets are using a Friday to consolidate/profit-taking. The indexes are not only trading above the T line but are using the 3T-line as support. Consider the uptrend in progress as long as there is not a major sell signal and a close back below the T-line. This fits in the analysis that when the markets gapped up through the resistance level two days ago, the prospects for a wave three to the upside is very likely.
Today’s positive trading in the markets is an inference that yesterday’s breakout through the resistance level of the past two months was not a fluke.
Wave three has started, clearly illustrated in the Dow which formed a left/right bullish combo, followed by a gap up through the resistance level.
20,000 on the Dow is a nice round number target but is ill relevant as far as the direction/magnitude of investor sentiment. Anticipate wave three to be in progress in the markets.