Archives for January 2016

The strength in the Dow and the S&P 500, if maintained today, what illustrate the top of the trading range of the past few days has now been breached. The NASDAQ is also attempting to trade back up above the T-line. The market conditions at this point lean toward higher probabilities of an uptrend starting based upon the past seven days of trading now looking as a support level. Having both long and short positions in the portfolio is still prudent but obviously if the bullish strength continues into the close, any short positions that are showing reversals should be lightened up and/or closed.

The markets continue to trade in an indecisive manner. Although the NASDAQ is trading higher, it is trading below where it opened. Crude oil is trading up $1.50 today adding strength of the oil sector stocks. With the market still in a very indecisive state, use each individual stock chart as the primary analysis.

Candlestick charts allows investors to get a much more clear indications of what the markets are trying to do. It also allows the candlestick investor to see when a market doesn’t know what it’s trying to do, as seen in the current market conditions. The T line remains an important trend factor for the major indices but the transportation index is showing more decisiveness up above the T-line. The transportation index trading positive and the other indexes trading negative is more evidence there is not any decisive consensus in investor sentiment. Short positions have been maintained during this recent bounce because they can never close back up above the T-line. And there are a number of bullish charts that are acting well. This is due to the markets not having any current direction.

Both the Dow and S&P 500 are currently forming a bullish stick sandwich signal. This continues to make the T-line an important analytical factor. Crude oil is also forming a potential stick sandwich provided it closes near the top end of its trading range today. The more prices can continue to close above the T-line, the more indication bullish sentiment is coming back into the markets.

The T-line continues to be an influence on the market trend. The Dow, after closing just below the T-line on Friday, is continuing to have problems getting up through the T line. The NASDAQ, the strongest of the indices on Friday, is currently trading back down to the T-line. The S&P 500 and the transportation index also are hovering just below the T-line. Crude oil is doing the same. Until there is a confirmed evidence that the T-line is not going to be acting as resistance, the downtrend has to be considered still in progress. However, it remains important to see how these market indexes closed at the end of the day. There have been candlestick reversal signals but the T-line still needs to be the final confirmation.

The T-line is coming back into play.The NASDAQ gapped up at the T-line and is now trading slightly positive from there making for a potential Dodie sandwich. The Dow and the S&P 500 are trading right at the T-line but the transportation index, after a MorningStar signal yesterday is now trading well above the T-line. If today’s strength maintains, the downtrend should now be converting to an uptrend.

The hammer signal in the Dow and the S&P 500 yesterday is being confirmed with today’s positive trading. The NASDAQ is also indicating bottom support. It will be important for the buying to continue into the close today. The next viable target will be the T-line. Although bottoming signals are appearing, and the candlestick charts indicate the probabilities indicate at least a bounce back up to the T-line area, the overall market trend still remains tentative until there is a close above the T-line. Numerous short positions have now been closed and any long positions added in this area should not show any negation of buy signals.

Where do most people sell? They panic sell at the bottom. How is that panic selling graphically depicted? When prices move excessively away from the T-line. This is what is occurring in the market indexes. This is what is occurring in crude oil prices. Does this mean a reversal is about to occur? It indicates that these are the conditions where a reversal is likely to occur. Watch your short term intraday charts, the 10 min. chart, to see if there becomes signs of a reversal. Until that time, continue to stay short.

A trend/price moves in a direction based upon investor sentiment. In a case of the indexes, the downtrend can still be easily identified due to the lack of a candlestick buy signal and a close above the T-line. A change in the indexes require a significant candlestick reversal signal. This usually occurs when some world event creates a different outlook from investors. Currently the major influence on the world markets, crude oil, has not had a change of downward direction. Although today’s trading is positive, it has not yet created any signal that would show a change of investor sentiment.

The September low for the Dow was 15,942. Currently there has been nothing to indicate a change of investor sentiment, the downtrend remains in progress. Continue to stay predominately short. Obviously there are very few long positions that have been staying above the T-line.