The markets early morning selling has put the indexes testing the support levels and the lows of October. Until there is an observed candlestick reversal signal and the confirmation of the indexes closing backup above the T-line, it has to be assumed the downtrend remains in progress. Short positions should be maintained and long positions should have very compelling reasons to stay long. NUGT is indicating the gold sector is still maintaining strength. Until the indexes reveal whether they are going to support in this area, establishing new positions should be held off until a definite market direction can be identified.

Note that the initial buying in the Dow, S&P 500, and the NASDAQ all failed at the T line before starting to sell off. The sideways trend channel of the indexes appear to be the predominant analytical factor. This implies some more indecisive volatility as long as there is not a breach of the sideways trend channel. This will make longer-term holds, anything more than three days, hard to keep in place.

The past two trading days are a clear example of why candlestick charts are very relevant. Fundamentals do not move prices, investor sentiment moves prices. The Dow has gone from the top of its trading channel to the bottom of its trading channel in the past two trading days. On big price move days, when prices move in the extremes, the 10 minute chart becomes a valuable tool. Watch the 10 minute chart to show when investor sentiment is starting to base, as seen occurring over the past 40 minutes. Witnessing bullish signals from these levels will indicate the selling has stopped and bullish sentiment has started. It is these type of days that allow the candlestick investor to make some big profits when seeing extreme price movements reversing.

Yesterday, the Dow formed a Doji at the downtrending resistance level. This made the prospects for some profit-taking to occur today. So far, the profit-taking pullback today has used the 3T line as a support level in the Dow and the NASDAQ. The S&P 500 is currently using the 50 day moving average as a targeted support level. Numerous stocks are still trading positive today, especially the bullish Doji sandwich charts of the past few days, indicating there is not a comprehensive selling in Today’s trading, merely profit-taking. Continue to stay predominantly long. There are also short positions working well. Crude oil appears to have found a base area and starting to trade positive from that level. Watch crude oil stocks for bullish signals.

Was Today’s big positive trading in the indexes expected? Not really, but the fact that investors were still showing bullish sentiment going into the weekend implies that big money decision-makers were not concerned about tariffs talks. Fortunately, candlestick charts provide the average investor (us) with a graphic insight as to what the overall decision process is doing at any particular time. This is what provides the opportunity to be in the correct direction of a price trend with a high probability/high percentage of the time. Stay long, as long as the trading remains above the T-line. Expects some profit-taking mid day, which will make how the markets act going into the close an important message.

Although the Dow is trading slightly lower, the NASDAQ and S&P 500 are trading just slightly positive. This would indicate merely shifting of funds from sector to sector. The transportation index is showing good strength today, also an indication that there is no dramatic selling pressure in the markets.

The expected profit-taking after yesterday’s big huge move to the upside is in progress. As long as the market indexes do not give back a majority of yesterday’s gains, anticipate this as early morning profit-taking. Watch to see if the indexes come back up toward the top end of the trading range by the end of the day. This would imply the profit-taking is over. As long as the indexes currently stay above the T-line, assume the uptrend remains in progress. Expects to be sitting and watching Today. Aggressive traders can buy pullbacks that appear to be supporting at T-line’s.

Today’s positive trading in the markets have brought all the indexes backup above the T-line after an indecisive basing period over the past five or six days of trading. However, volume remains relatively low on numerous stocks. The J-hook pattern appears to be a predominant price pattern that is working well in these market conditions. Any open positions require very convincing candlestick signals/patterns until the market provides strong confirmation of direction. This would require confirmed trading above the T-line in the market indexes.

The Dow is not holding at the 200 day moving average, a viable support level. The other indexes are trading lower but currently well up above their lows of the day. Obviously there is nothing showing any major change of investor sentiment. With the indexes trading below the T line, continue to stay predominantly short until there is some evidence of a candlestick reversal signal. As of now, the sellers remain in control. The weed stocks are showing strength today

Although the indexes are trading positive today, they are currently trading below where they opened. This indicates the lack of any dramatic bullish sentiment, merely a bounce. However, the transportation index is maintaining strength today after the inverted hammer/Harami at the T-line yesterday. Today’s positive trading is bringing that index backup above the T-line. The prognosis remains the same, assume the downtrend in the markets remains in progress until there is a candlestick reversal signal and a close backup above the T-line.