Archives for June 2020

Did candlestick charts indicate selling today? Yes! Was the magnitude of the selling anticipated? No, but candlestick charts revealed that taking profits was viable and adding short positions to the portfolio was viable. This puts the candlestick investor in the right direction at the right time!

The graphics of candlestick signals revealed a changing of investor sentiment. Did the signals reveal the magnitude of today’s selling potential? Definitely not, but it put candlestick investors in the position of benefiting from the strong selling, either by having taking profits over the past few days and adding some short positions to the portfolio. The Dow, S&P 500, and the Russell 2000 formed island reversals. These are very strong trend indicators. This would suggest there is more downside to the markets. Any long positions still existing in the portfolio should be producing compelling reasons to stay long. Otherwise, the probabilities based upon candlestick formations and patterns indicate having some short positions in place and maintaining a larger cash position until the market provides better indications the downtrend has stopped.

The strength of the selling today has produced numerous bearish kicker signals. These can be utilized based upon seeing the premarket futures indicating the markets are going to open lower again tomorrow. Due to the magnitude of the selling today, having cash available allows for watching if/when the market will bottom and being able to move aggressively if the markets reverse back to the upside. Utilize the 10 minute chart. This is a simple process. If the Dow moves all the way down to the 50 day moving average with the excess of selling tomorrow, watch to see what occurs on the 10 minute chart to demonstrate whether the 50 day moving average is a likely support level. If the market appears to be trading in a particular direction, the 10 minute chart on individual stock charts becomes a very valuable trading tool.

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Good investing,

The Candlestick Forum team.

What do you buy when the market is up strong? That is what makes candlestick analysis more clear, the positions that are producing big profits were already established based upon candlestick patterns. The simple process of analyzing the market trend and scanning for the strongest stock/sectors during an uptrend allows the candlestick investor to already be in trades at the appropriate levels. Current profits in many positions is not 5%, 10%, 15%, but more in the ranges of 30%, 60%, 100% plus. Utilizing the T line also helps from taking profits too early, a syndrome that keeps most investors from producing anything more than mediocre returns. The J Hook pattern, bobble breakout pattern, and the fry pan bottom breakout has produced excessive profitability during this uptrend.

BA exhibited a fry pan bottom breakout. Numerous other recommendations have produced huge profits based upon a combination of fry pan bottom patterns, followed by a J-hook pattern, called the classic pattern. Do not take profits just for the sake of taking profits. This is one of the big mistakes most investors make. At worst, take profits on partial positions. But until there is an identifiable market reversal and/or individual stock positions reveal sell signals and a close below the T line, the markets continue to reveal the uptrend is in progress. Take advantage of what investor sentiment is demonstrating.

Chat session tonight at 8 PM ET.

Good investing,

The Candlestick Forum team.