The Dow is producing the strongest bullish reversal prospects PROVIDED the Dow closes near the high end of the trading range. The other indexes are trading positive but below the T line. Be prepared for a reversal but give it to the end of the day.

The T line rule remains in effect! Until you see a candlestick reversal signal and a close above the T line, assume the downtrend remains in progress. That is why it was important to see what the premarket futures are indicating today. Stay predominately short. Any long positions require convincing bullish evidence to stay long.

Although the Dow is trading much higher, the other indexes do not appear to have the same follow-through strength. The reminder remains that as long as the indexes continue to trade below the T line, bearish sentiment is still in control. Any entry into long positions require confirmation of the bulls maintaining the position going into the close. Retail stocks continue their downtrend.

Assume the downtrend remains in progress as long as the indexes continue to trade below the T line. Stay predominately short until there is evidence of a strong candlestick reversal signals in all the indexes.

Yesterday the Dow formed a McMuffin signal, closing above the T line, a very strong reversal signal. So what was the next requirement? Bullish confirmation! Obviously that has not occurred. What is the current trend analysis? The downtrend resistance level has not been breached and if the indexes close at the low end of there trading range, they will be closing back below the T line. This indicates the downtrend remains in progress.

The markets remain in a tentative state. The bullish reversal signals of Friday still require the indexes to close above the T line. Until that happens, any new positions added to the portfolio should have very close stops. The T line is a very effective indicator of when investor sentiment has changed.