Archives for May 2017

Today’s positive trading is making the T-line relevant for the NASDAQ and the S&P 500, the Dow is currently testing the 50 Day Moving Average. The markets need to close near the high end of the range to indicate Wednesday’s big draw down was merely emotional selling versus a dramatic change of investor sentiment. A close near the top end of today’s trading range is important for illustrating a recovery versus a temporary bounce after a strong sell signal. Based upon the nature of the market for the past three months, a new flat trading range could be developing, as seen in the sideways movement of the markets after a big move one way or the other. This still allows for candlestick patterns to work effectively. Currently there are numerous J-hook Patterns bouncing back up from the T-line.

There is a better visual of RSI. That is the T-line. Watch how the individual charts that remained above the T-line in Yesterday’s sell off will likely have a much faster and stronger recovery than those that close well below the T-line Yesterday. Although the market is rebounding, be careful. It may merely be moving back up to the level it was trading prior to the final hour of panic selling. A close below the halfway point of Yesterday’s candle in the indexes would still illustrate the Bears are currently in control. The NASDAQ is currently the strongest index in today’s trading but still not yet back up to the halfway point of Yesterday’s candle. The indexes Gapping down from candlestick reversal signals demonstrates the strength of the selling. The downtrend need something dramatic to offset that message.

Knee-jerk reaction or a major change of investor sentiment? That question will be best answered on what type of candlestick formation is created in today’s trading. If the trading remains toward the lower end of today’s trading range, it now becomes a Bearish Best Friend Signal in the Dow, a Doji followed by a Gap Down. The NASDAQ would be a Hanging Man Signal followed by a Gap Down. If the markets trade near the top end of their trading range Today, creating indecisive/Hammer type signals, that would reveal Today’s profit-taking was merely profit-taking. The end of Today’s trading will provide more clarity as to which individual stock charts need to be closed based upon confirmed sell signals/weakness. Today is a perfect example on how prices/trends do not move based upon fundamentals, but move based upon investor sentiment. Obviously, the fundamentals of yesterday are no different than Today. It will be important to see how the markets close Today.

After opening positive this morning but now currently trading a little bit lower the market indexes still have not shown anything that  would show any change of investor sentiment. Unless there is a dramatic sell signal in the markets, as long as the indexes continue to trade above the T-line it has to be assumed the uptrend is in progress. This is allowing candlestick charts to produce big profits without any major worry of selling occurring in the market, i.e. SINA,NVDA,AMZN, VRX, AKBA.  The probabilities of Candlestick Pattern Breakouts remain very strong when there is nothing in the markets that show potential reversals.

Today’s positive trading affirms the lack of strength from the Bears, which would have been a viable prospect with the Dow and S&P 500 closing below the T-line a couple times last week. However, as can be seen in the Dow and S&P 500 candlestick formations, the Doji’s/Hammer Signals illustrated a lack of decisiveness. Today’s positive trading is currently bringing all the indexes backup above the T-line. The NASDAQ, trading in decisively each day last week, could never close below the T-line. The same prognosis remains, the uptrend remains in progress as long as the indexes continue to close above the T-line.

The Doji/Hammer type signals that formed in the Dow and S&P 500 Yesterday demonstrated that the Bulls have not left the market yet. But a lower open in those indexes today indicated the lack of any significant Bullish buying, keeping the overall market trend in a sideways/slightly downward trend. The term slightly downward is illustrated by the fact that numerous stocks are still trading positive, especially the biggies, AMZN. AAPL,NFLX, NVDA. These market indications continue to make a slowed downward drifting market the likely prospect until something major occurs to create new confidence coming out of Washington DC. Continue to concentrate on specific stock chart patterns, both on the long side and the short side. This is why we recommend Trend Analysis.