Yesterday’s Doji’s that formed in the indexes are being followed up Today by lower opens and lower trading. The downtrend is obviously still in progress but the gorilla in the room is the result of Today’s Fed meeting. Until there is a dramatic change of investor sentiment, stay predominately short.

Beware the positive trading in the Dow Today. The NASDAQ gapped down below the T-line after a bearish Doji sandwich. Currently there is no candlestick evidence of any bullish sentiment in these market conditions. The bearish J-hook patterns are working very nicely. Any remaining long positions should have very compelling reasons to stay long, otherwise assume short positions should be the prevailing positioning.

Santa Claus rally? This is why you always let the market tell you what the markets are doing. Obviously the co-vid influence overhangs the market. If today’s market trading closes near the lower end of today’s trading range, it will be very obvious there is no direction. Have both long and short positions in the portfolio but each position should have very compelling reasons to stay long or short, otherwise getting into a cash position is better until the markets demonstrate a direction.

The S&P 500 is showing the most compelling offset of yesterday’s selling with a gap up almost at yesterday’s open and then continuing to trade higher.. Currently the NASDAQ has illustrated its support at the T line, and the Dow is trading higher after two consolidating Doji days. Higher inflation numbers apparently is not creating any bearish sentiment in this current market trend. Use the T line for maintaining long and short positions.

The market remains in a consolidation/profit-taking mode after the strong run up over the past few days. Continue to use the T line as your trend indicator. There are numerous bullish candlestick signals and patterns that remain above the T line although showing mild profit-taking. Stay predominately long.

Profit-taking is not unexpected after the strong move in the market indexes over the past few days. However, there is not any dramatic selling. Stay predominately long as long as the indexes and stock positions stay above the T line.

The T-line acts as a very powerful trend indicator. First, it reveals when a trend is changing, as seen in the past few weeks when the indexes exhibited candlestick sell signals and closes below the T-line. Next, it indicates when a downtrend is in progress, allowing for continuing to hold profitable short positions. Combining candlestick sell signals at technical levels such as the major moving averages greatly increases the correct analysis of what is occurring in investor sentiment.

Beware the bounce! It is not unusual to see buying early in the day in a downtrend with selling continuing later in the day. However, the indexes are showing potential buying at major support levels. It will be important to see if the markets hold up today near the high end of there trading range. Currently the Dow is doing a bullish Harami at the 200 day moving average.

Candlestick charts clearly reveal a non-consensus of investor sentiment. Down one day, up the next day but with one vital factor, the T line. The prognosis remains the same, until there is a definite trend direction have both long and short positions in the portfolio, using the T line as your ultimate indicator. There are times when it is better to sit and wait for better chart information.

The T line remains an obvious factor, the indexes continuing their downtrend except for the NASDAQ. It is currently nudging the T line after opening lower. This puts the market mode back to bullish charts continue to act well and bearish charts continue to act well. Continue to have both long and short positions in the portfolio using the T line as your ultimate criteria.