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January 27th Market Direction

To most investors, Friday showed selling in the market indexes. To the candlestick investor Friday showed a strong candlestick reversal signal. The indexes formed bearish engulfing signals. The bearish engulfing signals were even more compelling sell signals in that they created bearish left/right combos. A left/right combo is a Doji followed by a bearish engulfing signal. That signal is considered one of the top rank reversal signals. And even more compelling that a reversal had occurred was the fact that the indexes created a strong sell signal and closed below the T line. With this all occurring in the overbought conditions, it provided the opportunity to close out long positions that were not maintaining good bullish chart patterns. Did the strong sell signal closing below the T line indicate the magnitude of the selling in Monday's trading? Definitely not, but what you did do was indicate it was time to be out of long positions with an extremely high degree of probability there would be further selling in today's trading. It can be visually evaluated that there have been candlestick sell signals during the uptrend of the past two months. However, the sell signals were not confirmed with any closes below the T line. Without that confirmation, maintaining long positions that had been using the T line as a support could be maintained. Positions that were not closed out and that had traded well below the T line today can be much better evaluated based upon the type of candlestick formation they produced in today's trading.WDC formed a bearish left/right combo on Friday but it did not close below the T line. Today's gapped down in price produced a Doji, the lack of any strength after the open. This would have warranted closing out the position if held to the end of the day. Positions such as TWLO, IRBT, and UBER produced evidence the bulls were still in control, opening much lower but closing well above their open. These positions create a much more clear trading … [Read More...]

January 27th Daily Market Comments

The strong sell signals that formed in the indexes on Friday, but Dow forming a bearish left/right combo, created the probabilities of more selling today. Was the magnitude of Today's selling anticipated? No, but the strong sell signals of Friday implied there was going to be more downside. When the market/stock prices move down dramatically from a knee-jerk reaction, the 10 minute chart becomes the best time frame to see if the markets are going to bounce or continue to show weakness. That allows for closing long positions that are not showing any strength or as an aggressive trader, being ready to buy if it looks like the market and stocks stabilize and start moving back up. Currently with the Dow down 460 points, it is to early to see which direction the markets will move from here.   … [Read More...]

January 24th Daily Market Comments

Although the markets are still trading above the T-line, the graphics of the candlestick charts are starting to reveal more bearish candles, meaning opening higher but closing lower. Although the trend remains above the T-line, the evidence of bearish presence is starting to reveal itself. Today's excuse for the markets selling off after a much stronger open is one case of virus in the Chicago area. This does not make for a change of market conditions, merely an added excuse for why investor sentiment is starting to get a little bit bearish at these levels. Continue to take profits on charts that are starting to show weakness.   … [Read More...]

January 23rd Market Wrap-Up

The markets indicated profit-taking was going to be in progress based upon the evening star signal that formed in the Dow last week. The candlestick investor has the advantage of being able to analyze whether sell signals represent a major change in the trend or merely short-term profit-taking. The early trading Today continued the selloff but the NASDAQ in the S&P 500 demonstrated the T-line was still acting as a support level for the uptrend. The Dow traded down over 200 points early in the day, well below the T-line. Although the Dow closed lower, candlestick investors could clearly see that the bulls were still in control the trend. The Dow closed above where it opened, showing buyers were still in the market. Also, it closed above the T-line along with the other indexes. There is an important statistical factor relating to the T-line. When a price/trend continues to close above the T-line, the probabilities are extremely strong the uptrend remains in progress. Candlestick signals and patterns are the graphic depiction of investor sentiment. The T-line has Fibonacci characteristics. It acts as a natural support and resistance level of human nature. When you combine the analysis of candlestick's in relation to the T-line, you gain a very strong probability factor for analyzing trends. Maintaining a position, even when well in the overbought condition, can be done with much more comfort knowing the uptrend continues as long as the price stays above the T-line. This is very will illustrated in the trend of AAPL. This keeps investors in a position when normal human nature wants to take profits because there are profits. The T-line is instrumental when advocating cutting losses short and letting profits run. Chat session tonight at 8 PM ET. Click here to register.  Good Investing, The Candlestick Forum Team   … [Read More...]

January 22nd Daily Market Comments

The Dow down, the NASDAQ up, the uptrend remains in progress, the indexes continue to trade above the T-line. Maintain long positions, the candlestick patterns are providing strong bullish opportunities, i.e. UBER J-Hook pattern. Although impeachment hearings are going on, the investment community is looking at economic factors, such as housing starts, to make their decisions. … [Read More...]