Archives for January 2020

Iranian retaliation! Impeachment! Crude oil spike! Wouldn’t we think each one of these situations could devastate the market uptrend? The major advantage of utilizing the graphics of candlestick charts allows in investor to immediately analyze what everybody thinks the results of outside influences would do to the overall market trend. Friday the Dow was down 230 points, bearish? Candlestick analysis provided two analytical factors that revealed very sentiment may not be taking control. Buying could be detected when witnessing the candlestick formation was showing bullish sentiment, buying occurring after prices opened. Although the Dow closed lower, it was trading above where it opened, indicating the bulls had not left the market. Adding the additional factor that the indexes closed above the T line also provided the statistical probabilities that the bullish trend was still in progress. The same scenario can be applied to today’s trading. The indexes opened much lower but showed buying after the open, to the point where the indexes actually closed above the close of Friday. Once again, today’s close above the T line continues to produce the high probability expectation the uptrend is still in progress. The visual development of individual candlestick formations during an uptrend dramatically improves the prospects of not getting whipsawed out of positions.

The lower open in the indexes also produce the same results in numerous stock prices. Any time prices can be seen to have supported at the T line and then started moving higher creates much greater probabilities the bulls are still in control of the trend. When the big stocks such as AAPL, NFLX, AMZN, NVDA all reveal bullish candlestick formations, this is an additional factor to confirm bullish sentiment is still the overriding market direction. Although the overall market started out much lower today, pattern set ups such as the J Hook pattern provided very easy entry strategies. Our recommendation on NINE was based upon a J Hook pattern set up in an oil sector stock. NINE finished up 22% for the day. Do all pattern set ups produce huge gains? Definitely not, but a major attribute of candlestick analysis is that identifying the patterns that have been created by human nature for centuries allows investors to be in situations where the probabilities of being in a big price move is greatly in their favor.

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

Good Investing,

The Candlestick Forum Team

The first days of trading in a new year usually reflect the investor sentiment of the big-money. Sometimes you see specific sectors that come out strong in the first few days/weeks of a new year because that was the evaluation over the holidays that was going to be the sectors most beneficial in the current economic environment. This is usually indicated by strong chart patterns in those stocks of those sectors. This year, the candlestick charts indicated a different criteria. The T-line had been acting as an effective uptrend support level over the past four weeks. The last few days of training of 2019 showed some selling but without one major candlestick technical factor, the markets cannot close below the T-line. That allowed for the anticipation of what investor sentiment was going to indicate as far as buying/selling going into the new year. Obviously, a negative open would have indicated the selling was still in progress because of the trading below the T-line. As a candlestick investor, the logic is very simple. A positive open would indicate the T-line was still acting as a support level. The magnitude of the positive trading in the premarket futures indicated very quickly the bulls were still in control. This allowed for adding long positions immediately and continuing to hold long positions in the portfolio that were continuing to trade above the T-line. Putting these simple candlestick analytical factors together allows investors to know what to do with portfolio positioning with a high degree of accuracy.

The strength of the premarket futures created high probability entry strategies using candlestick patterns. FTCH had been recommended early in the week based upon a fry pan bottom breakout potential. Charts demonstrating fry pan bottom breakouts such as MAVR and AAPL provide huge investment advantages. The results are usually very predictable as far as direction, even though on any given day the overall market direction may be negative, a fry pan bottom pattern is the buildup of investor sentiment which does not consider the overall market trend has a relevant factor. Additionally, the result of the investor sentiment buildup produces extremely large profits when the pattern breaks out as investor sentiment becomes very confident. Exploiting the information built into candlestick patterns is merely identifying price movements that have resulted in high probability/high profit trade results for hundreds of years. Prices do not move based upon fundamentals, prices move based upon the perception of fundamentals. This is exactly how candlestick signals and patterns are created. Nobody knows what this coming year will produce as far as market results. However, utilizing the information built into candlestick charts allows an investor to much more accurately analyze the overall market trend and then extrapolating that into analyzing the price movement of each individual stock chart.

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

Good Investing,

The Candlestick Forum Team