Archives for January 2019

The Dow and the S&P 500 are continuing their slow uptrend toward the 50 day moving average. The strongest indicator is the NASDAQ, after going through the 50 day moving average yesterday on a small J-hook pattern, it is continuing to show buying strength today. Although the indexes are in the overbought condition, there are no signs of any exuberance to the upside nor any signs of excessive selling pressure. Anticipate more slow upside but have your safety stop’s in place.

The Dow is moving sideways but indicating there is still bullish sentiment in the market. The NASDAQ is more informative with it currently nudging the 50 day moving average, forming a potential J-hook pattern. It will be important to see whether the NASDAQ can maintain its strength near the 50 day moving average or whether they start selling off from that level. Gold appears to be trending sideways, crude oil trying to get back up through the 50 day moving average. Although the strength of today’s buying is not resilient, it indicates there is no signs yet of any selling pressure. Stay long especially in the sectors that are continuing to show good strength, i.e. cannabis stocks.

The T-line remains a relevant factor. The indexes, one trading on their lows of the day, appeared to be using the T-line area as support. This is more of an indication of profit-taking versus any full-scale reversal, as long as the indexes remain above the T-line. Currently, many stocks, although trading lower are trading indecisively, as Doji’s. This illustrates the lack of selling pressure, merely profit-taking. Continue to stay with the strong bullish charts.

A consolidation day, a Friday after a good strong week. The current pullback in today’s trading does not seem to be moving too much away from where the markets opened, creating a Doji type day. Continue to hold long positions unless they are producing obvious candlestick sell signals. The T line is still a viable trend indicator. Investor sentiment indicates it has not had a major change when you see some of the big stocks still trading up strong i.e. NFLX.

It is not unusual to see selling in the morning with buying in the afternoon during an uptrend. Today’s early selling is healthy and that it is taking profits in the markets along the way. However, if selling comes back going into the close Today, expect a profit-taking pullback for the next day or two of trading. Stay long until you see confirmed sell signals. The market indexes still have the 50 day moving average as a viable target.

Nothing has changed investor sentiment, the slow uptrend in the indexes still makes the 50 day moving average the likely target. However, note that the daily candlestick formations are Doji/spinning top type days. This would indicate a more tentative bullish trend, making the 50 day moving average area a very important level to watch. A failure or an indecisive bearish signal at the 50 day moving average would confirm the slow uptrend did not have rampant bullish pressure. Stay long but be attentive. The uptrend could change dramatically if there are indications the trading agreements with China have turned sour.

Profit-taking appears to be in progress, not unexpected after a strong run in the market over the past few trading days. Today’s selling does not illustrate any major trend reversal, merely some backing and filling. Numerous stocks have hit resistance levels, incurring some profit-taking. The Dow continues to trade higher but currently well off its highs. There is nothing yet to show any major change of investor sentiment. Stay long as long as the indexes remain above the T-line.

The whipsaw day of Thursday was obviously offset by Friday, breaking the indexes backup above the T-line. The NASDAQ has shown consistent strength today even when the Dow and S&P 500 were waffling near the breakeven level. The slow/steady buying today reveals contemplated strength versus any exuberant buying.

What are the first few days of trading this year indicating? The markets are going to be very reactive to good news and bad news, creating whipsaw movements. Fortunately, even with big movements up and down, the candlestick scanning process continues to identify very strong bullish or bearish chart patterns. These patterns are effective because they are being created with investors making decisions knowing the market is currently in a non-trend situation. Utilize the T-line to get a better grasp as far as the market trend as well as individual stock trends. There are still good profits being made in this whipsaw market.

Apple causing another knee-jerk reaction. Once again, it will be very important to see how the markets perform going into the close. If the markets appear to be closing near the lower end of their trading range today, it will indicate that bullish investor sentiment is getting tired, the buyers are giving up. On the other hand, if the markets close near the top end of their trading range,  that would be an indication that any bad news is not going to push the market down any further. Be ready to close out weak long positions if the market closes near the lower end of the trading range. Be ready to buy long positions if the market holds up well today but make sure they have very strong buy signals.