The rhetorical question, why is the market moving up when the number of virus cases appears to be skyrocketing? The candlestick investor does not have to know the answer to that question. The candlestick investor is merely interested in what everybody else’s investment decision is doing. Apparently investors are looking past the virus crisis or the escalating virus reports is not the relevant number being evaluated, the number of deaths reducing may be the primary factor. Remember, investors are putting their money on the line based upon what they feel the prospects are for the future. That often means disregarding or taking into consideration what current situations are demonstrating.
A major underlying strength of this market trend is its lack of excessive/exuberant buying. The NASDAQ is trading at an all-time high but it was a long steady recovery from the March bottom. The Dow and S&P 500 have shown slow steady uptrends, not revealing any excessive buying. These market conditions have allowed for the identification of candlestick signals and patterns that produce high probability trades setups. The pattern breakouts also imply much stronger price moves than merely up trending stocks during a slow up-trending market. Watch the chemicals, Internet servers, and education and training stocks this week. They have produced observable candlestick breakout patterns.
July 6th Daily Market Comments
The Dow is nudging the 200 day moving average again. A breakout through that level would imply much more upside in this market. The NASDAQ gapped up and opened at a resistance level and continue to trade higher. Economic indicators continue to show bullish sentiment. Although the coronavirus numbers have escalated, it appears as if investors are looking past those numbers, expecting better economic environments in the near future. Stay long as long as the indexes continue to trade above the T-line.