The T-line continues to act as a relevant support factor in all the major indexes, except for the transportation index. The potential J-hook pattern forming in the indexes is also producing numerous J-hook patterns in individual stock charts. As long as the indexes appear to be supporting at the T line area, assume there is no dramatic selling pressure in this market.

The indexes are having a hard time coming back up through the T-line. The transportation index is trading well below the T line. Although the NASDAQ is trading positive, it resisted at the T-line. Assume the downtrend is the predominant direction.

A knee-jerk reaction can be better identified when seeing the NASDAQ open but then starting to trade positive. Numerous stocks also illustrate the same reaction by gapping down to the T line and then starting to trade positive from there. However, the Dow has shown a strong failure at the 50 day moving average and currently trading below yesterday’s open. The Dow needs to show some good strength going into the close, otherwise 50 day moving average becomes a viable resistance level.

Expect some consolidation Today, the Dow is nudging the 50 day moving average, a potential resistance level. The NASDAQ and the S&P 500 are currently trading positive but indecisively as a Doji tape day. Stay long, utilize the patterns for better upside probabilities.

The current early morning profit-taking is not unexpected. The transportation index is showing good strength today, implying the selling in the other indexes is merely profit-taking. Assume as long as the indexes are currently above the T line, an uptrend is in progress.SPOT can be bought on today’s positive trading confirming yesterday’s best friend signal.

Although the markets are trading positive Today, they are still in the cautionary stage. The Dow is trading higher after a reversal signal on Friday. The NASDAQ and the S&P 500 are trading higher but did not have reversal signals on Friday. This still requires seeing good bullish confirmation today, keeping the indexes above the T line. Numerous short positions have now been covered and buying any new long positions require maintaining strength going into the close today. Be careful.

Now the indexes provide good pattern analysis. If the Dow closes at the low end of its trading range, it will be creating a bearish J-hook pattern, implying more downside. If the Dow closes near the high end of the range or even positive on the day, it will have formed another hammer signal at the support area. The other indexes fit into that same analysis. This allows for being prepared for maintaining or closing short positions.

Watch the T-line! The indexes, although trading positive, appear to be resisting again and the T line area. Numerous short positions continue to trade lower while staying below the T line. Be careful on any bullish trades executed in these market conditions.

After a couple hammer signals in the Dow below the T-line, there was the expected prospect there may be up bounce back up to the T line. Note that today’s high in the Dow resisted right at the T line. A bounce because of Microsoft’s earnings? Could be, but the next concern can be the Fed meeting this afternoon. Use the T line as your ultimate criteria. Numerous stocks started trading positive today but currently with indecisive candlestick formations, Doji’s.

Potential reversal signals in the indexes yesterday, however this is why confirmation is very important. Currently the indexes are trading at or below yesterday’s open after gapping down again. Keep in mind, the bearish sentiment is still pervasive with the indexes not showing candlestick buy signals and closing above the T line. The downtrend persists based upon today’s lower trading. It may take a few days for investor sentiment to heal up.