and The Candlestick Forum
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Option put spreads appear to be the best strategy in these market conditions. The indexes continue to trade lower, staying below the T-line. Option put spreads allow for taking advantage of continued down trending stock positions even after extended down moves. All the indexes currently are trading below the T line and have not shown any evidence of candlestick reversal signals. The trading strategy remains the same, stay predominately short but there are some good bullish sectors in progress. The lithium mining stocks are trading stronger and the energy stocks continue their uptrend. This allows investors to have both long and short positions in the portfolio.
Chat session tonight at 8 PM ET. Click here to register.
Good Investing,
Stephen Bigalow.
Yesterday the Dow formed a McMuffin signal, closing above the T line, a very strong reversal signal. So what was the next requirement? Bullish confirmation! Obviously that has not occurred. What is the current trend analysis? The downtrend resistance level has not been breached and if the indexes close at the low end of there trading range, they will be closing back below the T line. This indicates the downtrend remains in progress.
The markets remain in a tentative state. The bullish reversal signals of Friday still require the indexes to close above the T line. Until that happens, any new positions added to the portfolio should have very close stops. The T line is a very effective indicator of when investor sentiment has changed.
The market trend remains easily identifiable based upon candlestick analysis. A change of market trend requires a bullish reversal signal and a close above the T line. Friday, the Dow illustrated a MorningStar signal, producing the potential of a market reversal. However, it needed to trade positive today and close above the T line, which obviously it did not do. The NASDAQ and the S&P 500 also traded lower, failing to close above the T line. This is important because a market trend can be analyzed with an extremely high degree of probability based upon the T line rule. Although the downtrend remains in progress, currently there is evidence of some basing/buying. These market conditions prepare the candlestick investor to be looking for long positions while maintaining short positions that have not produced by signals and closed above the T line. This simple analysis based upon the probabilities of human nature allow your investment abilities to be greatly enhanced by simple trend analysis.
To Download recorded sessions;
In order to download click on the link below, once on the video page you will click on the three-dotted vertical line located at the bottom right-hand side of the video player and click on “download” to save to your files.
Option profit-taking is much better analyzed using simple candlestick analysis rules. Option profit-taking should occur when the probabilities of your option trade is starting to diminish. When the markets are in oversold conditions and the indexes start revealing potential reversal signals, the candlestick reversal signals revealed an individual stock moves become more enhanced. The Dow formed a Doji in the oversold area today. The NASDAQ formed a meeting line signal, a bullish potential reversal. That becomes the first inclination to watch for reversal signals in individual stock positions. A bullish engulfing signal occurring in oversold condition of a stock price and the market start to show some bullish signs, whether a full-scale reversal or merely a bounce back up to the T line, produces better probabilities for taking profits in put trades. A major advantage of candlestick signals is allowing for the identification of very strong reversals. The strongest individual candlestick signal is the kicker signal. It has three variations. Join us Saturday, May 12 for a Candlestick Forum Mini Spotlight training on identifying and utilizing the kicker signal. Visually recognizing this signal and knowing the expected results will greatly improve your trading profitability.
Chat session tonight at 8 PM ET. Click here to register.
Good Investing,
Stephen Bigalow
Once again it will be very important to see how the markets close today. Likely there will be some short covering but that is what causes the positive trading early in the day. With the indexes continuing to trade below the T line, a market reversal will require a very strong bullish signal.
The early-morning positive trading requires strength going into the end of the day to indicate any change of investor sentiment. The indexes still trading below the T line imply the downtrend is in progress but be prepared for a potential bounce back up to the T line area.
May 19th Daily Market Comments
Assume the downtrend remains in progress as long as the indexes continue to trade below the T line. Stay predominately short until there is evidence of a strong candlestick reversal signals in all the indexes.