Archives for August 2019

Yesterday the Dow formed a bullish engulfing signal that bounced off the 200 day moving average and closed above the T line. Today’s gap up further confirmed the potential of a strong bullish reversal. The other major indexes showed bullish trading also. However, there is one visual piece of evidence that still needs to be addressed. All the indexes are still trading in an observable sideways trend. The Dow provides the most bullish characteristics as it is nudging the top of that sideways trend that has been created in the markets over the past month. Why is this an important observation? Because prices/trends move based upon investor sentiment. The nature of the market for the past 30 days has been reactionary to positive or negative tweet’s or announcements, producing drastic whipsaw reactions. Until investor sentiment shows a change, meaning a breakout of the current trading channel, it can still be assumed that any news related event/tweet still produce a whipsaw all affect. The strong bullish candle signals created in the indexes indicated the lower edge of the trading range was acting as support. This makes the trading strategy very simple. A breakout to the upside after the strong bullish signals have appeared over the past two trading days would indicate a new dynamic in investor sentiment, producing a good bullish trend indication. A failure to breakout, especially revealing in the Dow chart, would indicate investor sentiment is still in an indecisive mode.

What is the best trading strategy for this market analysis? There are very strong bullish signals occurring in individual stocks. Adding to the bullish positioning of a portfolio is viable but with caution. Any signs of the market indexes moving back down into the trading range or continuing in the sideways trading range would indicate market conditions still warrant sitting on the sidelines. There are a number of very strong bullish charts that can be bought based upon further bullish confirmation in the overall market trend. NVDA, for example, created a very strong MorningStar signal off the 200 day moving average. The Doji followed by a gap up from that level, the best friend signal, and closing well above the 50 day moving average and the T line, makes the prospects of a J-hook pattern set up extremely likely. It is this type of strength in a bullish signal that permits a candlestick investor to start adding to long positions based upon the lack of any strong selling indications in the overall market. Simple logic indicates that candlestick signals that are showing strong bullish potential in conjunction with a general market index breakout allows for entering trades well before other technical trading methods start confirming a trend.

Chat session tonight at 8 PM ET with Stephen Bigalow. saferedirecturl=”https://www.google.com/url?q=https://stephenbigalow.com/webinars/stephen-bigalow-webinar-082919/&source=gmail&ust=1567195092786000&usg=AFQjCNFNsxJBmJ3pwjMPoyYrPbFHplJp_Q”>Click here to register. 

Good Investing,

The Candlestick Forum Team

Candlestick charts allow investors to observe the obvious. There are strong bullish signals to indicate an uptrend. There are strong bearish signals indicate a downward trend. And candlestick formations illustrate the nature of investor sentiment! As illustrated in the market trends of the past four weeks, strong days to the downside, followed by strong days to the upside, and that trend repeating makes it very clear that it can be analyzed that neither the Bulls nor the Bears are in control of the market trend. There will be times when the market indexes demonstrate indecisive sideways trading. This would instigate having both long and short positions in the portfolio. There are also times when it can be visually recognized that the sideways mode of the market involves vast oscillations to the upside and the downside. These market conditions make maintaining long and short positions very difficult. These conditions warrant sitting out of the markets until investor sentiment can be much more easily identified.

With price movements of individual stocks being whipsawed with the market moves, there is only one indicator that becomes the crucial final decision making indicator, the T line. The ramifications of a price move remain the same even in a wild oscillating market. A very simple rule, you can stay long as long as the price does not reveal a sell signal and a close below the T line. This has been illustrated as a very high probability trend factor. The same scenario is true on the short side. You can stay short until you see a candlestick buy signal and a close above the T line. The probabilities of maintaining a position using the simple rule is predicated on a very simple factor. Candlestick signals illustrate a change of investor sentiment. A close above or below the T line confirms the change of investor sentiment. Maintaining bullish positions that has not closed below the T line even though the overall market is moving up or down in a strong fashion continues to demonstrate the strength of bullish investor sentiment continuing a trend. Once you have learned how to utilize the anticipated results produced by human nature, creating candlestick signals and patterns, you will dramatically improve your profitability.

We will conduct a “Members Only” chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team

Are you like most investors, that seem to get whipsawed out of a positions when things do not look good? Fortunately, candlestick analysis greatly reduces emotional decision making. Today, the Dow traded higher on the open. But the fear factor of the inverted yield curve, short-term bonds producing a higher yield than longer-term bonds, promotes the possibility of a recession. After trading positive in early trading, the indexes started trading lower. This usually knocks out the week traders. Because candlestick analysis utilizes visual indicators, the T line provides a very significant trend indication. Utilizing the simple T line rule, the uptrend remains in progress until witnessing a sell signal and a close below the T line keeps the candlestick investor from panic selling at the wrong times. Note today’s trading in the Dow bounced off the T line and started to move back up. The reason this is significant is that the T line is used by an in an orderly small percentage of all investors, so small that it should be categorized as nobody uses the T line. That means it is not be in watched as a potential target. When prices support and resist as often as they do at the T line, it provides additional confirmation of the graphics of investor sentiment, candlestick signals, with the T line’s natural support and resistance level of human nature.

Utilizing the T line as a trend indicator allows the candlestick investor to keep from getting scared out of positions. The simple trading rule is that as long as there is not a candlestick reversal signal and a close below the T line, and uptrend remains in progress. Add the factor that the market indexes have produced strong bullish signals over the past week of trading allows for waiting to the end of the day to make any major decisions about closing out positions. Candlestick patterns are the product of human nature reacting the same way time after time. As illustrated in our recommendation on CBLK, identifying the potential scoop pattern, created by a MorningStar signal right on the T line, dramatically increases the probabilities that confirmation of the MorningStar signal will produce the expected scoop pattern breakout. This analysis is based upon centuries of trend move observations. Having the ability to identify high probability trades set ups allows the candlestick investor to constantly have positions oriented toward the correct direction as well as establishing option trades that have high probability/high profit potential.

Chat session tonight at 8 PM ET with Guest Speaker Troy Epperson. Click here to register. 

Good Investing,

The Candlestick Forum Team