Yesterday’s strong sell signals would suggest Today’s positive trading is merely a bounce. The indexes are trading below the T-line. That should be the indication that bullish sentiment is not in this market. Continue to stay predominately short. Any long positions require trading above the T-line to stay long.

The markets are demonstrating some profit-taking, as expected, after a big run-up over the past few trading days. Note that even though the indexes are currently trading lower, they are trading above where they opened, indicating this morning selling is probably just profit-taking. Stay predominately long but there continue to be good short positions also. The uptrend will remain in progress provided the indexes close above the T line.

Yesterday’s MorningStar/inverted hammer signal continues to confirm Today. The NASDAQ formed a kicker type signal that is also confirming from yesterday. Short positions demonstrating reversal signals over the past couple of days should now have been closed out. Long positions are confirming with bullish signals and trading above the T line. As long as the markets close above the T line today, assume the uptrend is back in progress.

The markets showed consolidation today after the big selling of yesterday. All the indexes are showing Doji type days but stochastics have not yet gotten into the oversold area. The direction of the markets will still be predicated upon how the indexes open tomorrow. T

Beware the bounce! Although some indexes and stocks are trading positive Today, they are trading below where they opened, demonstrating the bulls have not taken control. If predominately short, be patient, investor sentiment is not likely to reverse immediately.

Paying attention to the T-line rule will dramatically improve your profitability. Last week when it was evident the indexes cannot close back up above the T line, the high probability assumption is that there was more downside.

The T-line remains the relevant trend indicator. Although the indexes illustrated potential reversal signals at support levels, today’s trading revealed the failure of the T-line again. However, the current support levels are acting as support, making the market trend extremely indecisive.

The markets are not showing any strength that would indicate a change of investor sentiment. The downtrend remains in progress as long as the indexes continue to trade below the T line. Crude oil is up strong, making the oil stocks a bullish area. Otherwise, remain predominately short until there is a definite reversal signal.

The T-line probabilities! Note that the positive trading in the Dow this morning failed right at the T line once again. The NASDAQ and the S&P 500 continue to show weakness, trading at the lower end of there trading range after the initial buying this morning. Simple rule – as long as the indexes are trading below the T line, a downtrend is in progress.

The 50 day moving average appears to be acting as support for the Dow, after forming a Doji yesterday followed by a bullish and golfing signal today. The bullish indication requires a strong close today, stochastics are not yet in the oversold area.