Archives for February 2016

Today’s trading is showing indecisiveness, the transportation index and the NASDAQ are showing strength while the Dow and S&P 500 are selling off. The main factor remains that the indexes continue to trade below the T-line, maintaining the simple scenario that the downtrend remains in progress. However, the transportation index is remaining above the T-line in a steady uptrend. This implies the current weakness in the market is not demonstrating wholesale selling. Stay predominately short but long positions in the portfolio can be producing profitability.

The bearish J-hook pattern remains the predominant pattern in the market indexes. Any long positions remaining in the portfolio should have compelling reasons to stay long. Short positions should now be the predominant trading strategy. The long positions should be oriented to the gold sector.

Today’s positive trading, confirming the bullish Harami of yesterday in the Dow and the S&P 500, unless experiencing strong selling before the end of the day, is demonstrating that the trading channel is a very slow uptrend bobbing along the T-line. Fortunately, numerous sectors such as the oil sector and the gold sector have been working extremely well during the sideways mode. Those are obviously the sectors be trading long. Numerous stocks have been trading absolutely sideways for the past three weeks. Obviously stay long in the strong sectors and short in the week sectors, both should still be in the portfolio.

The evening star signal in the Dow and the S&P 500 are confirming today. The NASDAQ opened at the T-line and immediately started trading lower. If the indexes close near the lower end of their trading range today, expect wave three of a bearish J hook pattern to be in progress. Add short positions to the portfolio today. Gold is breaking out of a frypan bottom pattern,NUGT a good long positions.

The magnitude of today’s selling has a very relevant factor. Although the indexes have not breached the T line to the downside, the strength of the selling clearly indicates the lack of consistency of an upward trend reversal. Although there may be an uptrend in progress, it is without any consistent bullish force. It will be important to see where the indexes close today. A close below the T-line in the Dow and the S&P 500 would create an evening star signal, making for the possibility of a bearish J-hook pattern to be forming in those indexes. This would imply another strong leg to the downside. Obviously the weakness in the markets are also attributed to the failure of crude oil prices to stay above the T line after yesterday’s bearish left/right combo. Be ready to come out of long positions if the markets close near the lower end of their trading range today.