The market indexes hit all-time highs Today. But be careful of profit-taking. Not because the markets of hit all-time highs but because of other indicators that show the current trend of this past week has moved too far too fast. The market indexes have moved away from the T-line. This is the alert for potential profit-taking in this area. That may not necessarily mean the market will reverse and back off, it might indicate the markets churning sideways for a few days. This would allow the T line to catch up. In these type of market conditions, expect individual stock prices to do some consolidation or profit-taking. The fact that the indexes continue to move higher in the face of bad news, politics of Washington, the China virus crisis, is the definition of a bull market. This is why the analysis of candlestick charts tells investors exactly what the investor sentiment is doing versus what everybody thinks should be happening based upon news events.
The candlestick patterns continue to work well, much better than merely up trending price moves during this uptrend. The fry pan bottom was the cause of the recommendation of RVNC Today with further expectation of a big breakout to the upside. The strong price moves during the past few days were exhibited in strong candlestick reversal signals. These included the best friend signal, which is a Doji followed by a gap up, or any signal in the oversold area followed by a gap up. Many money managers advise not to trade positions that are gapping up because you might not understand what is happening. A candlestick reversal signal followed by a gap up tells you exactly what to expect, a very strong price move. Candlestick analysis is just common sense investment perspectives put into a graphic depiction. When you understand the investment psychology that created a signal and then know what to expect to confirm that reversal signal, you understand price movements with the same clarity as somebody who has been trading in the markets for decades.
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Good Investing,
The Candlestick Forum Team
February 7th Daily Market Comments
Today’s profit-taking was not unexpected, not because the markets hit all-time highs yesterday, but that the market indexes had moved too far away from the T-line. Today the selling is blamed upon the China virus, or the jobs numbers being strong deters the possibilities of another rate cut. They will always find a reason for the selling. What is more important is analyzing the candlestick charts to show what is likely to happen based upon human nature. The Dow was up over a thousand points this week, profit-taking was expected. This does not alter the uptrend.