Archives for April 2017

The markets remain in an indecisive trading mode. The NASDAQ is showing a good strong Bullish Chart, as well as the transportation index. The transportation index is currently forming a trend kicker signal. If it closes above the T-line today, the prospects of a Scoop Pattern set up is highly probable, indicating more upside. The Dow is the weakest of the indexes but it is having a drag put on it by the much lower trading of IBM. Obviously the long positions are working well today but do not abandon any short positions in the portfolio that has not illustrated a confirmed reversal signal. The trading prognosis remains the same, have both long and short positions in the portfolio.

A learning experience – the positive trading yesterday in the market indexes did not create reversal signals, merely an up day. Because it was not a reversal signal, it can be assumed there was not any major change of investor sentiment. Today’s lower trading confirms. Nothing has changed in the current trend/nature of the market. It continues to move in a sideways mode, making each individual chart the predominant analytical factor. Long positions should not be showing sell signals/weakness, short positions should not be showing bullish candlestick signals. The patterns continue to work as the most effective profitable trade results. This is why we recommend being strong in trend analysis.

Currently the market indexes are creating Bullish Harami signals at the same levels the indexes bottomed out 3 to 4 weeks ago. However, the optimal word is currently. To create Bullish Harami signals today, the indexes need to close near the high end of their trading range. A close back near or below today’s open and most of the indexes would indicate the current downtrend was still in progress. Until the market indexes can show enough strength to close backup above the T-line, the downtrend has to be considered to be still in effect. Keep both long and short positions in the portfolio.

The NASDAQ is showing strength at the 50 day moving average. However, the Dow and S&P 500, currently trading slightly positive, still are trading below the T-line. This has to be viewed with the probability that the slow downtrend is still likely to be in progress. Support at the 50 day moving average, starting another uptrend, definitely requires a bullish reversal signal and a close above the T-line. Until then, let the short positions continue their downward trend until there is a definite reversal signal. This is why we recommend Trend Analysis.

The indexes have been trading below the T-line for the past 4 to 5 trading days. But each day has been a very indecisive trading day, Doji’s. The sideways motion of the market would be obvious when analyzing any chart, however a candlestick chart provides additional evidence that the sideways motion of the market is including indecisive trading days. This clearly reveals there is no conviction from either the Bulls or the Bears. What should this be telling us? To be prepared for a dramatic move, usually indicated by a gap one way or the other. Although the market direction is not doing anything, be ready.

If the markets close near the low end of their trading range, it will reveal that the indecisive trading over the past two weeks at the T-line was acting as a resistance level. The 50 day moving average has been acting as support. But if the Dow closes below the 50 day moving average, a downtrending channel will remain in progress. The NASDAQ is currently trading below the T-line and at the 50 day moving average. The indecisiveness/weakness of the markets are being blamed upon the lack of scheduling for tax cuts. Many long positions are showing a lack of bullish conviction whereas the short recommendations continue to move lower with more enthusiasm.