The indecisive pullback in the markets over the past week was an indication that there was not any aggressive selling sentiment in the market. Today’s positive trading, especially in the NASDAQ, indicated the markets were ready to turn bullish on any good news. Today’s job report provided that stimulus. If the markets maintain strength going into the close, demonstrating that they will close above the T-line today, there would be good probabilities wave three of a J-hook pattern was starting. Currently the markets are trading at the low end of their range. It will be important for a bullish trend to have strength exhibited going into the close. The T-line remains a critical analytical tool.
The markets continue to demonstrate a lack of selling pressure. The past week of trading has revealed an indecisive pullback, implying profit-taking versus a reversal. Yesterday’s hard selling in the Dow is being offset by a potential bullish Harami today that might be closing right at the T-line. The prognosis remains the same, as long as there is not a severe sell signal in the market indexes, the uptrend is likely still in progress.
The T-line remains a very vital support indicator. The Dow is currently trading right at that level, the NASDAQ is trading positive today backup above the T-line. Unless there is a dramatic selloff today, it still has to be assumed the uptrend remains in progress as long as there is not a major candlestick sell signal and the market indexes closing below the T-line. LABU is trading backup above the T-line today after yesterday’s Doji day, making the biotech stocks good bullish positions. Continue to have both long and short positions in the portfolio.
The markets continue to drift lower, with emphasis on the term drift. The Dow, although trading lower, is forming another Doji type trading day, continuing to trade above the T-line. The NASDAQ and S&P 500 are also currently forming a Doji days at the T-line area. The indecisive nature of the daily formations illustrate there is no strong selling pressure. And there has not been a candlestick sell signal in the Dow or the NASDAQ. Anticipate more profit-taking but until there is a dramatic sell signal, the uptrend is likely still in progress.
The profit-taking of the markets that started last week are still in effect, more so in the NASDAQ with it gapping down and trading lower below the T-line today. The S&P 500 has done the same scenario, currently trading at the T-line. The Dow is trading lower and indecisively but still just slightly above the T-line. It will be important to see how the markets close today, the T-line being an important factor. The uptrend is not shown any confirmed indications that it is over but obviously there is some profit-taking going on currently. Take some profits on the long side and continue to hold a few short positions until there are indications the profit-taking is over.
The graphics of candlestick charts clearly show the indexes utilizing the moving averages as support potential. The NASDAQ is trading right on the T-line, the Dow is trading in decisively at the 3T-line. The overall analysis is that the markets are trading lower but in decisively. The trend analysis remains simple, the uptrend remains in progress as long as there is not a close below the T-line. Specific sectors continue to act well, i.e. biotech’s. Stay with the strong sectors and have a few short positions in the portfolio.
There are some huge profits being made in this market rally over the past few months, especially when candlestick charts pinpoint which sectors are acting the strongest. LABU provides the visual evidence that the biotech’s have had a strong price move, a pullback/profit-taking, followed by another strong price move. This makes LABU as a viable leverage trade but it also allows the candlestick investor to stand for the strongest chart patterns in the biotech sector.
Observe the obvious! Apparently investors liked what they heard in last night’s speech. Does this change the fundamentals of many companies? Obviously the perception is that the earnings potential of companies are getting better based upon this administrations policies. This is why we like Candlestick signals, it gives you an unfair advantage over other chart analysis. Stay long, biotech’s continue to maintain their strength. Gold stocks are selling off, the economic fear factor is diminishing.
The flat trading of today still reveals that there has not been any change of investor sentiment. Unless there is a very definite reversal signal in the markets, it has to be assumed the uptrend remains in progress as long as there is not a sell signal and a close below the T-line. This does not eliminate the possibility of some profit-taking back to the T-line. However, currently there are no signs that the uptrend does not remain in progress. Stay long but have protective stop’s in place.
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. These candlestick signals are clearly defined in our free 12 Major Candlestick Signals.