Archives for October 2018

Today’s positive trading was illustrated in the premarket futures. The current trading has brought the indexes backup above the T-line, with the NASDAQ actually opening at the T-line and trading positive. This signifies the prospects of more upside provided bullish strength is maintained throughout the day and going into the close. A close back below the T-line, creating shooting star type signals, would indicate the Bulls have not taken control.

After the panic selling in yesterday’s afternoon trading was witnessed, there were numerous scenarios on how the markets open Today. A lower open followed by a huge selling or a gap down would have indicated the panic selling at the bottom. The flat open followed by bullish trading is currently creating a bullish Harami. This might show the end of the downtrend but will require bullish confirmation. But as required in yesterday’s trading, the bullish trading needs to be continuing going into the close. Any buying at these levels require nimbleness.

Today’s positive trading in the markets are helping to confirm bullish candlestick signals in the oversold area. Last week the market indexes produced a bullish Harami that was followed by a lower trading Doji. Today, bullish trading is confirming the Doji. If the markets close near the top end of their trading range today, producing a good solid bullish candle, that will produce more evidence the Bulls are starting to reengage, producing a basing area. The final bullish confirmation still requires the indexes to close backup above the T-line. Any buying in this area should be conscious of that T-line confirmation.

The benefit of the 10 minute chart on days like this allow candlestick investors to see much more clearly when after hard selling, when the Bulls are starting to step back in. Yesterday’s bullish Harami in the indexes obviously were not confirmed with a gap down in Today’s trading. That implies there is going to be more downside if the indexes close near the low end of their trading range. But an important bullish indication would be if the indexes close above where they opened Today. This may not necessarily mean the markets were trading higher but it would indicate a bullish Harami followed by a hammer signal in the oversold area. Also the measurement of wave three of a bearish J-hook pattern may be getting close to the same magnitude as wave one. The 10 minute chart will be a very vital trading tool Today.

Which way are the markets moving? Strong buying today but still trading well below the T-line. When the market conditions get to the point where you do not know whether you should be long or short, wait for more investor sentiment information. Obviously numerous stocks that traded much lower yesterday are showing bounces to the upside Today. Closing positions or opening new positions should probably be delayed until the end of the day, witnessing whether the Bulls are still maintaining going into the close or the continued downtrend is in progress. A pretty nebulous analysis but when you cannot have a clear analysis of which way the market is moving, sit on the sidelines for a little bit.

Although the indexes showed some strength after the open yesterday, they are still trading below the T-line. The markets look like they’re in a basing action but nothing yet to tell you the Bulls have taken control. Maintain the short positions but be prepared to lighten up if there is bullish evidence in the markets before the end of the day. Obviously the markets are still in a indecisive mode. Have both long and short positions in the portfolio.

Although the NASDAQ is showing a little bit of bullish trading today, the underlying factor remains that the indexes are continuing to trade below the T-line. Until there is a confirmed buy signal, it still has to be assumed that the market trend is heading lower. The 200 day moving average remains a viable support area but there has not yet been any signs of bullish candlestick signals indicating the selling has stopped. Remain predominantly short, any long positions in the portfolio need to show compelling reasons to stay long.

Be careful, the expected bounce today is providing a lot of positive trading in stocks but many stocks are not moving much from where they opened or are trading below where they opened albeit they are still trading positive. Short positions that have been showing bullish signals and are confirming today should be covered, but expect a couple days of choppiness in the markets before any major trend, either bullish or bearish will continue from here. Any trades placed over the next couple trading days should be done so with the idea that if things turn the opposite direction, go back to cash quickly.

The T-line remains a relevant factor when analyzing the indexes. The indecisive trading yesterday, although buying brought the indexes backup toward the top of their trading range, the T-line still needed to be addressed. Today’s lower trading continues to make the T-line a resistance level. Investor sentiment still needs time to recover from the hard selling of last week. Indecision still remains. If you cannot find compelling trade set ups, sit patiently in cash for a few more days.

As anticipated, after the large bullish move in the markets yesterday, profit-taking is in progress. Is Today’s trading profit-taking or a failure of the uptrend to start? A very easy trading strategy can be put into place. Today, watch the 10 minute chart. If there becomes an area where the movement of the markets start showing support on the 10 minute chart, aggressive buyers can start stepping in with the anticipation that yesterday’s bullish candlestick signals are still in effect. It will be important to see where the indexes close Today. Profit-taking would be indicated with the indexes closing near the high end of their trading range.