Archives for March 2018

Cohns resignation has caused the knee-jerk selloff today. Knee-jerk? With the Dow down 163 points, this is approximately one half of the selloff from what the premarket futures were indicating most of last night. The candlestick chart reveals an indecisive formation, a hammer type signal, based upon the Dow trading at the top end of the range so far today. An unofficial indicator, yet graphically obvious to the candlestick investor, is the fact that stocks that were in a bullish trend are holding up reasonably well on this pullback, some even trading positive, AAXN, SQ, while the bearish charts gains strength to the downside. It will be important to see if they close the indexes near the top end of the trading range or near the bottom of the trading range today. That will provide much better clarification as to whether the uptrending channel is maintaining or the Bears are starting to take control. Be ready to close out long positions if there is no evidence of buyers going into the close.

The Dow is trading lower, the NASDAQ is trading higher, the S&P 500 is flat. This indicates no major change of investor sentiment. The trading of the indexes are all in the midrange of a slow uptrending channel. The lack of any consensus of the indexes make the individual stock charts the main evaluation factors. Individual stocks are moving up or down based upon their own merits versus the overall market be in an influence. The strategy remains the same, be predominantly long with a few short positions in the portfolio. This is why we recommend Trend Analysis.

When the indexes are trading below the T-line, the downtrend is in progress. Today’s excessive selling is offset a little bit by the fact that the NASDAQ is trading above where it opened, albeit still lower on the day. Are the markets trading off because of tariffs? That is the excuse but note that the sell signals occurred two days before the unexpected announcement. As a candlestick investor, utilize what the signals are illustrating versus knee-jerk reactions to announcements. Stay predominantly short but there are still some long positions producing profits i.e.AAXN.

The consolidation of the markets are continuing but not with any great aggressiveness Today. Although the market indexes are trading slightly lower, they are currently forming Doji’s. Watch to see if the indexes are supporting at the lower and of an uptrending channel. The transportation index is trading higher, illustrating the lack of across-the-board selling pressure in the markets. Remain defensive, maintain a few short positions in the portfolio. Be prepared to close out positions that are not showing compelling movements either on the long side or the short side. The market is still trying to figure out which direction it wants to go.