Archives for March 2018

Today’s trading is a perfect example for illustrating that what ever investor sentiment was doing going into the close one day has nothing to do with what the investor sentiment might be at the open of the next day. Today’s weakness in the markets are on the verge of breaching the lower support levels. The Dow needs to close near the top end of its trading range today to maintain the wedge formation. The S&P 500 is trading below the T-line and the 50 day moving average. The NASDAQ has gapped down below the T-line, making the 50 day moving average a viable target if the markets do not close at the top of their trading ranges today. A close near the low end of trading today would make the drifting/sideways motion of the markets the predominant trend analysis. Continue to have both long and short positions in the portfolio.

Candlestick analysis provides simple scanning techniques that not only reveal the direction of prices, but the nature of the direction. Currently, the indexes are not showing any identifiable direction. The Dow is still trading in the compressing area of a wedge formation. The other indexes, after hitting resistance levels have pulled back to support levels and appear to be holding. An additional observation from candlestick scans reveal bullish trading today in numerous stocks but not necessarily showing bullish trends, merely indicating some buying in prices that have pulled back. In general, the market conditions continue to reveal an indecisive sideways trading nature until upper resistance or lower support levels are breached. This does not make for very good trading but it allows for being prepared for breakouts one way or the other. That is where good profits will be made.

Note the relevancy of the T-line today. Not only acting as a support level but more importantly making the current patterns in the indexes to be more relevant. The S&P 500 and the transportation index are hovering right on the T line. The NASDAQ has use the T-line as a support so far today. The positive trading in the Dow makes the wedge formation more apparent. AAPL and NFLX have used the T-line as a support. Today’s positive trading in the markets do not reveal any major significance, merely keeping price levels in observable patterns and channels. The T-line remains the ultimate trend indicator for maintaining long positions as well as short positions.

Having the ability to analyze a price trend allows the candlestick investor to anticipate what the remaining price move will likely be. Yesterday, the indexes failed to break through observable resistance levels. The Dow, closing lower, indicated its wedge pattern was still in existence. Although the markets started out very bullish today, it had to be suspected that until there was a breach of the wedge pattern to the upside, the wedge pattern was still the predominant analytical factor.

Although the Dow is trading up 100 points, it is still showing difficulty getting up through the 50 day moving average and the downtrending resistance level. However, the other indexes are demonstrating strength going through resistance levels. The overall uptrend remains in progress. There appears to be an underlying confidence for the overall economy.

The Dow and the transportation index are showing resistance at the 50 day moving average, the S&P 500 is showing resistance at the recent high of two weeks ago. The NASDAQ continues to trade higher after the breakout of the resistance level last week. It is not unusual to see some profit-taking/resistance at a major moving average, the 50 day moving average, but it will be important to see whether those resistance levels can be breached either today or tomorrow. Otherwise the sideways mode of the market in general will remain in progress.

The slow upward trend channel in the Dow and S&P 500 are better confirmed with Today’s positive trading, the S&P 500 gapping up through the 50 day moving average, the Dow gapping up after yesterday’s Doji type day through the T-line. The NASDAQ broke through the downtrending resistance level yesterday after a bullish left/right combo. Today’s positive trading further confirms the J-hook pattern wave three is still in progress. Unless there is some major political/world event investor sentiment continues to create bullish candlestick patterns, indicating a continuation of the uptrend.