Today’s gap up in the indexes broke out of trading ranges/resistance levels. This now add credence to the large bullish engulfing signals/left/right combo signals of last week. Assume the uptrend is back in progress with the indexes trading well above the T line. Provided the indexes continue to maintain good strength today. The uptrend would be negated on hard selling from the open, bringing prices back below the breakout levels. Numerous short positions have been covered over the past couple of days based upon the appearance of reversal signals confirming. The recent long recommendations are working.

The markets are in a whipsaw mode, indicating investor sentiment does not indicate a consensus of trend direction from day-to-day. The Dow is currently in a sideways channel. The NASDAQ and the S&P 500 are bouncing around the T line. The market does not know where it wants to go. This is illustrated by the candlestick charts. If favorable probabilities cannot be identified in the market trend and/or individual positions, sit back until trend results can be better identified.

Inflation! It’s not going away yet. The NASDAQ and S&P 500 have gapped down below recent lows. However the Dow opened at the recent lows and is currently trading above where it opened. This makes today’s open in the Dow an important trend factor. It will be important to see whether today’s open in the Dow is going to act as a double bottom support. Stay short, the short positions are obviously working well.

The inflation numbers continue to appear strong. Shouldn’t that have pushed the markets down? That would be the initial thought process but the Dow showing strength. However, the S&P 500 is flat and the NASDAQ is trading slightly lower. The lack of any severe selling at least provides the alert that other influences might be coming into play. What are those influences? Don’t know, but now aware that there might be other considerations. Stay predominately short but vigilant.

The market trend analysis is greatly simplified when visually applying the information on a candlestick chart. The combination of candlestick signals and the T line make for highly accurate trend analysis. Although the Dow is trading relatively flat on the day, the other indexes, the NASDAQ, S&P 500, and transportation index continue to show a bearish trend, especially the NASDAQ. Note that short positions that have strong sell signals continue to perform well. If you are not comfortable shorting positions, utilize the short funds.

Consider what has created the current overall bearish market trend. The administration’s policies has created bearish investor sentiment. Currently, nothing has changed to change in investor sentiment. Any bullish trading in the market requires a definite candlestick reversal signal to show a change of the current market trend. Be nimble.

Although the indexes did not show reversal signals, numerous short positions did show potential reversal signals. This became the alert that even though there were no reversal signals in the indexes themselves, further positive trading would have been confirming bullish reversals in short positions, which should have been closed immediately upon witnessing the premarket futures showing strength. Any long positions added today should be watched closely, making sure the general market remains in a bullish bounce.

An up day in a downtrend so far. The manufacturing report is apparently producing some hope that inflation is receding. However, there is not any evidence of a major change of investor sentiment as long as there is not a reversal signal and a close above the T line in the market indexes. The same analysis should be applied to short positions that have not yet shown buy signals and closes above the T line.

The T line remains a valuable criteria! Yesterday’s bullish trading produced a non-signal in the Dow and S&P 500. And the indexes did not close above the T line. Today’s gap down in the indexes indicate the bearish sentiment is still in control. Stay predominately short. Any bullish trades require very compelling bullish charts to stay in any long positions.

The market indexes are in a potential transition area, oversold, away from the T line, forming a potential bullish Harami today in the Dow and the NASDAQ. However, the final analysis is determined by what the indexes do at the end of the day. Any short positions showing excessive buying, such as kicker signals i.e.NFLX in the oversold area. Close positions, there are better probability trades elsewhere.