Archives for May 2017

As illustrated in the Dow chart yesterday, a close below the T-line was an indication there might be some consolidation over the next few days. The NASDAQ is currently trading right at the T-line. The S&P 500 is trading below the T-line. Except for the NASDAQ, the other indexes are showing weakness/sell signals at the same levels the indexes topped out back in March. The main driving force of the markets are still predicated upon the expectations of things getting done in Washington DC. The market itself acts as a barometer as to what investor sentiment feels is being accomplished between our illustrious politicians. Expects some more sideways/consolidation.

The NASDAQ, although selling lower today so far, is still supporting on the 3T-line. The S&P 500 has supported on the T-line. The Dow is showing the greatest weakness with it trading below the T-line, but not yet showing any decisive movement either Bullish or Bearish. The most profitable/productive trades continue to be results of Candlestick Patterns, Frypan Bottoms and J-hook Patterns. The overall market uptrend remains in progress albeit very slow. This is why we recommend Trend Analysis.

The NASDAQ is showing the most Bullish confirmation today. Note how it gapped up through the J-hook pattern resistance level. The breakout into new territory confirms a J-hook pattern has a high probability of continuing the uptrend. The gap up into new territory adds additional credibility to the J-hook Pattern. A close near the high end of the trading range Today would be a good indication that wave three of the J-hook pattern is in progress.

When the markets or a stock price is not showing any decisive move, the T-line becomes a very important confirming indicator. Currently the Dow, the NASDAQ, and the S&P 500 are demonstrating potential J-hook pattern setups. What makes that analysis more compelling is the fact that each index has use the T-line for a support area, during the previous uptrend and for showing support for a J-hook pullback. The T-line makes for a very simple trend analysis. As long as trading stays above the T-line, the uptrend is assumed to be in progress.

The markets continue to show definite indecision. It would be assumed that the market would pick up strength after the Dow about whether a healthcare bill was going to pass or not. However, this is a perfect example that no matter what each individual may think should happen has absolutely nothing to do with what the markets actually do. This is why the Japanese Rice traders always profess to let the market tell you what the market is doing, not what we think it should be doing. Today’s trading is not producing any vibrant action. Each individual chart should be the primary analytical factor. The T-line remains an important trend indicator.

Today’s indecisive trading in the markets is probably the wait and see mode for the results of the healthcare vote. The market still illustrate the lack of any change of the current investor sentiment, an uptrending market. As long as the indexes remain above the T-line, albeit indecisively, the good trending/good pattern charts continue to move in the right direction. The magnitude of movement is somewhat diminished with the sideways mode of the market but still producing good profits. Our June Live Cattle trade, utilizing the classic pattern/J-hook pattern has produced huge profits with the price gapping up daily since the J-hook pattern breakout. This illustrates the simple strategy of candlestick analysis. It allows you to close out bad trades quickly and let your profitable trades run until you see a sell signal.

Today’s lower open in the NASDAQ after Yesterday’s hanging man signal in the overbought condition illustrates the area of profit-taking in the NASDAQ trend. The Dow and S&P 500 are trading lower but in decisively, Doji type days. The T-line remains a relevant factor, both for analyzing the market trend as well as individual stock moves. FUEL illustrates a J-hook pattern using the T-line as support. Our recommendation on LNTH based upon the Doji Sandwich breakout had a potential sell signal Yesterday but did not close below the T-line. As can be seen, Today’s trend kicker signal clearly indicates much more upside. The combination of identifying  signals and patterns in conjunction with the T-line dramatically improves Price/Trend Analysis. The Dow and S&P 500, trading indecisively above the T-line, produces greater probabilities the uptrend remains in progress until a close below the T-line reveals a change of investor sentiment.