Let the market tell you what the market is doing! This is the advice from the Japanese rice traders. When the indexes showed strong sell signals on Monday and closed below the T line, the probabilities of the market trend change dramatically. A close below the T line produces strong probabilities the downtrend is now in progress. The downtrend will remain in progress until witnessing a candlestick buy signal and a close back up above the T-line. Today's trading illustrated continued indecisiveness. The Dow bounced off the 50-day moving average but then closed at the T line. The NASDAQ continues to trade below the T-line. This puts the market trend still in an indecisive nature. These are market conditions that warrant having both long and short positions in the portfolio. Long positions can be maintained as long as there is not a candlestick sell signal and a close below the T line. Short positions can be maintained as long as there are not bullish candlestick signals and a close above the T-line.
Candlestick investors have a major advantage. Very simple scanning techniques will allow for immediately pinpointing which chart patterns are producing the strongest bullish strength and the strongest bearish strength. Even when there is not a definitive direction of the overall market, the simple scanning techniques will always find good strong buy positions and good short positions. Currently, there are numerous J-hook patterns in progress, the insurance stocks are showing strong J-hook patterns. AXL is illustrating a bobble breakout, which is a very high probability trades set up.TUP has formed a MorningStar signal right on the 50-day moving average, clearly indicating this is where the buyers were stepping back in. The analysis of candlestick charts allows for extremely high probability trades.
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The Candlestick Forum team. … [Read More...]
A large bearish left/right combo on Monday, closing the indexes below the T-line, confirmed the obvious selling. Further confirmation is demonstrated by the fact that the T-line is acting as the resistance level. The 50 day moving average appears to be the likely target, indicating more downside but that could be achieved Today. Short positions require the same strategy, have safety stops in place. Because there is always the potential of a positive announcement, vaccines, stimulus package, big earnings that could blast the market back up again. The portfolio bias should be more oriented to the short side.
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The T-line rule! As long as the indexes cannot close back up above the T-line, assume the downtrend is in progress. The indecisive nature of trading is the indecision going into the election. Obviously, this makes trading relatively difficult, investor sentiment can swing one way or the other based upon the prospects of the stimulus package. The indecisive trading is not only in the indexes but in individual stocks. Numerous trending stocks have experienced choppy trend movement. However, there is evidence of bearish trades starting to work with more consistency,NVAX, OSTK. Keep safety stops in place.
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What is the direction of the market trend? What are the candlestick charts revealing? The graphics of candlestick analysis makes analyzing market trends/stock price trends relatively easy. When you cannot identify the direction of a price move, because of the lack of candlestick signals and/or the waffling of a trend near the T-line, the trend analysis is easy. There is no identifiable trend. Currently the transportation index is trading back up above the T-line. The NASDAQ is trading below the T line. The Dow and S&P 500 are trading back up right to the T line level. This does not provide any conclusive trend analysis. What do you do with this trading scenario? Simple, stay long in long positions that have not shown any sell signals and are still trading above the T line. Stay short in short positions that have not shown any buy signals and continue to trade below the T line.
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October 22nd Daily Market Comments
A large bearish left/right combo on Monday, closing the indexes below the T-line, confirmed the obvious selling. Further confirmation is demonstrated by the fact that the T-line is acting as the resistance level. The 50 day moving average appears to be the likely target, indicating more downside but that could be achieved Today. Short positions require the same strategy, have safety stops in place. Because there is always the potential of a positive announcement, vaccines, stimulus package, big earnings that could blast the market back up again. The portfolio bias should be more oriented to the short side. … [Read More...]