November 4th Market Direction

The market indexes all hit new all-time highs, expected based upon the candlestick patterns setting up going into the all-time high breakout levels. The Dow formed a frypan bottom pattern as it moved up toward the breakout levels. The NASDAQ and the S&P 500 performed J-hook patterns which illustrated the wave three of a J-hook pattern would take those indexes out into new high territory. Having the ability to analyze the nature of investor sentiment at specific levels dramatically improves the probabilities of staying in positions through important technical levels. The bullish patterns also developed in the longer-term charts, implying a major new bullish wave was beginning.

When investor sentiment can be analyzed as being consistently bullish, this allows the candlestick investor to take advantage of high profit pattern breakouts. It also provides the opportunities to make big profits in lower-priced stocks that require an overall bullish atmosphere in the general markets. When investor sentiment starts getting bullish across-the-board, news items on individual stock positions produce much bigger profitability when there is little fear of bearish sentiment turning the markets around. The major advantage candlestick charts provide for the candlestick investor is the ability to have a vast majority of portfolio positions moving in the same direction all at one time. Many investors complain that there overall returns are not always great in a bullish market because of some of the positions in the portfolio trading lower even as the market trades higher. Candlestick analysis dramatically reduces having unprofitable positions in the portfolio during specific trends. This is what creates much greater profitability for the candlestick investor.

 

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October 31st Market Wrap-Up

The Dow remains the most sensitive of the indexes, reacting with much more activity on bullish or bearish news. Today’s Chicago manufacturing numbers sent the markets lower with the Dow showing the most weakness. However, by the end of the day the NASDAQ and the S&P 500 closed toward the upper end of their trading range, utilizing the T-line as a support level. The uptrend remains in progress as long as the indexes continue to close above the T-line. The NASDAQ and the S&P 500 show more resiliency now that they have broken out through the upper resistance level of the sideways trend. The Dow and the transportation index are showing the most weakness based upon candlestick reversal signals. This could pull the NASDAQ and S&P 500 lower if the Dow shows more weakness from this level. The final criteria is still the T-line. The indexes need to remain above the T-line to confirm the bullish sentiment is still controlling the slow uptrend of this market.

The strength of individual chart patterns continue to produce good profitability, even when the overall market conditions do not show overall strength. Our recommendation on CVET was based upon a cradle pattern breakout. The 2+2 evaluation uses the expected results of a cradle pattern as well as a positive open confirming the cradle pattern by trading above the T line. The combination of candlestick patterns in conjunction with T-line expectations dramatically improves the probabilities of being in the correct trade at the correct time. This was also illustrated in Today’s positive trading in our recommendation of this past week in UCTT, forming a Doji/hammer signal supporting on the T-line followed by positive trading today clearly illustrates the bullish strength remains in this uptrend. Candlestick analysis is merely the identification of what investor sentiment does with a high degree of probability and utilizing confirming indicators that improve the probabilities.

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October 24th Market Wrap-Up

The wedge pattern in the indexes was being confirmed on a daily basis by the indecisive trading of the indexes. The Dow has demonstrated its lack of direction by trading relatively flat for the past four trading days, keeping the Dow well into the wedge formation. The NASDAQ and the S&P 500 have been trading in a slow upward direction revealing a very important factor. Those indexes are currently nudging the top resistance level of the wedge formation. This provides the prospects of the NASDAQ and S&P 500 breaking out through the sideways trading of the past few months, indicating a new wave to the upside. The upper resistance level will be an important factor to watch in tomorrow’s trading. A deterrent could be the strong sell off from the earnings report in AMZN. The implication of a wedge formation is that there is not any decisive bullish or bearish force to move the indexes out of a sideways trending formation. This also implies the sensitivity of investor sentiment, likely to react either bullish or bearish upon news or tweet related information. When a trend is in progress, negative news will not create a dramatic affect the change a strong bullish trend or positive news will have less the fact when occurring in a bearish trend.

When the markets do not have a definable trend, the advantage of utilizing candlestick charts is identifying the strong bullish or bearish signals, then applying the trend analysis with the T line. Currently, numerous bullish recommendations have been maintaining a steady Eddie trend as long as they continue to trade above the T line. This simple analysis, based upon human nature, allows for profitable trading in market conditions that would whipsaw most investors out of positions.

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October 21st Market Direction

The markets continue to trade in the sideways wedge formation but with a current upward bias. Today’s positive trading in the Dow brought the hard selling of Friday backup above the T-line. But more bullish credibility was seen in the transportation index trading up strong while at the same time the NASDAQ and the S&P 500 were showing good strength after bouncing up off the T-line area. Trading in the middle of the wedge formation provides the prospects of some sideways, noncommittal trend direction. However, as long as the markets are not showing any dramatic selling, individual candlestick chart patterns will continue to demonstrate the direction of their movement based upon the bullish charts staying above the T-line and the bearish charts staying below the T-line. Currently, there are numerous J-hook patterns and frypan bottom patterns that are producing consistent trends.

Candlestick patterns are created by the build up of investor sentiment. The build up of investor sentiment in a particular stock price overrides the sentiment demonstrated by the general market indexes. That evaluation essentially produces a favorable trade for the candlestick investor. The lack of any major affect of the overall market indexes allows for investor sentiment to continue a price move in individual stock charts. This provides a much more accurate evaluation for each individual stock chart/sector. Simple candlestick scanning techniques reveals which sectors are gaining the most strength during an uptrend or the most bearish sentiment, allowing for both long and short positions to be profitable when the markets in a sideways trading mode. Currently, good profits are being made in shipping stocks. The weed stocks have produced good short positions. The graphics the candlestick charts allow investors to pinpoint the most profitable trade set ups.

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October 17th Market Wrap-Up

The continued uptrend of the markets are still a result of the bullish flutter kicker of last week. The strength of that signal allows the candlestick investor to anticipate that the top of the wedge formation is still the likely target. That allows for the expectation of additional upside for at least the next day or two. The candlestick investor also has the advantage of being able to recognize what is occurring in investor sentiment once a major resistance level is hit. Indecisive trading at that level, such as Doji’s or shooting stars, indicate a much higher probability that it is time to take profits at those levels. A breakthrough of the resistance level with a good solid candle indicates the lack of any concern for that resistance level anymore, implying more upside. Because each candlestick signal and pattern produce expected results, a trend is much more easily analyzed knowing what the nature of each signal or pattern represents.

Utilizing the information built into a pattern produces much higher probabilities of participating in a breakout price move at the appropriate time. As illustrated in our recommendation on WLH, the gap up through the resistance level confirmed the frypan bottom breakout. Being able to visually recognize today’s trading was an indecisive/Doji type day produces an extremely high probability profitable trade entry based upon a positive open tomorrow. A positive open, utilizing the Doji rule, would produce a high probability of more upside. This would create a bullish Doji sandwich breakout. When analyzing where the breakout should occur and then seeing a strong candlestick signal that would confirm a bullish breakout, the candlestick investor will not only have high probabilities of a correct trade but the additional benefit of an extremely strong price move. Combining candlestick signals with candlestick patterns produces the opportunity to participate in huge price movements based upon the results of investor sentiment.

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October 14th Market Direction

Last week, the bullish flutter kicker signal produced very strong evidence the Bulls were stepping back in with great force. This indicated the sideways wedge formation in the indexes was still intact. That evaluation provides a strong expectation for establishing or maintaining positions in the portfolio. Investor sentiment was revealing a lack of major bullish pressure as well as a lack of a major bearish pressure in the overall market trend. This makes the analysis of each individual stock chart the most predominant factor. The lack of any major trend movement reduces the prospects that uptrending bullish candlestick patterns will be reversed due to any strong market selling. Short positions have the same results, downtrending stock positions can be maintained with the lack of any significant bullish pressure in the markets. Simple candlestick scanning techniques reveal shipping stocks as a strong bullish sector and the weed stocks are still downtrending, good short positions.

When the market indexes are in a sideways mode, the candlestick investor has a great advantage of being able to analyze which stock charts are producing pattern setups for identifying the potential of big breakout price moves. A candlestick pattern, moving up to a observable resistance level, produces an extremely high probability of a correct trade result. But more so, this set up has the prospects of producing excessive profit movements. Because human nature works the same way time after time, it produces a great advantage for the candlestick investor that understands why eight pattern is being created. A frypan bottom pattern coming up to a resistance level, as illustrated in the NVDA chart, produces an expectation of a strong breakout if that resistance level is breached. Numerous candlestick patterns, in conjunction with a candlestick signal at a breakout level dramatically improves the probabilities of being in a very strong price move.

 

 

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October 10th Market Wrap Up

Today’s positive trading was well anticipated. The setup for a bullish flutter kicker was established in Wednesdays trading. The bullish flutter kicker signal is one of your strongest candlestick reversal signals. It is created when the trading gaps up to the top of the previous day’s open, which had been a bearish candle, and forms a Doji. The gap up itself was a sign of a potential reversal. Once the Doji was formed, a bullish flutter kicker signal is easily recognized as well as anticipated. The Doji rule – prices will usually move in the direction of how they open after a Doji, makes entering profitable trades an immediate process. The bullish flutter kicker signal as anticipated as soon as there is a positive open after the Doji. Knowing this signal is being created allows for establishing profitable positions upon the open.

Anticipating the market indexes are going to trade positive allows a candlestick investor to immediately establish bullish positions in individual stock charts that are also creating bullish flutter kicker signals. NVDA and AAPL had bullish flutter kicker set ups. This is where the 2+2 analysis greatly improves the probabilities of being in a profitable trade. A bullish flutter kicker signal in NVDA provided clear evidence the frypan bottom pattern was going to stay above the T-line, implying more upside.AAPL produce the same scenario, a frypan bottom pattern that would be confirmed with a positive open after yesterday’s Doji, illustrating a breakout of the observable resistance level. Candlestick charts allow for the analysis of a build up of investor sentiment, creating a candlestick pattern. Identifying a strong bullish candlestick signal at a breakout level dramatically improves being in the appropriate trade at the appropriate time. This is merely taking advantage of the consistent patterns that are created by human nature time after time.

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October 7th Market Direction

The indecisive trading of today was not unexpected after the strong reversal of last week. The profit-taking, creating the indecisive Doji day Today was occurring at technical levels that were be in watched by all investors, the 50 day moving average. The Dow closed right on the 50 day moving average while the NASDAQ after trading higher started resisting and selling off at the 50 day moving average. The T-line remains a relevant indicator. The positive trading of last week improved bullish investor sentiment after the indexes bounced up with candlestick reversal signals at support levels such as the 200 day moving average. There is a trend channel being created in the indexes, implying a sideways motion in the markets. However, with support being shown at the low end of the trend channel, investor sentiment although moving from aggressively negative, is not dramatically bullish either. Because of where bullish and bearish signals have occurred over the past few months, it is much easier to graphically evaluate the lack of any major trend in the current market. Fortunately, the simplicity of candlestick scanning techniques allow for identifying the strongest bullish charts as well as bearish charts. These market conditions allow the candlestick investor to be making money by having both bullish and bearish positions in the portfolio.

The number of bullish chart setups has grown over the past few days of trading. This not only indicates a build up of investor confidence, it allows the candlestick investor to pinpoint the strongest potential trades. Currently, numerous frypan bottom patterns, cradle patterns, and McMuffin patterns are being formed. These strong bullish patterns allows for executing high probability profit trades even though the overall market trend remains in a sideways mode. The expectation of results from candlestick patterns dramatically improves the probabilities of being in a profitable trade as well as highly profitable trades. A McMuffin pattern,as demonstrated in our recommendation of TLRA, was based upon the expected results of that pattern set up. Simple candlestick analysis allows investors to identify which trades produce the highest probability results.

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October 3rd Market Wrap-Up

Candlestick charts reveal much more clearly what is occurring at technical levels, such as the support level at the 200 day moving average, whether there has been a true reversal once that level was it or whether it was merely a bounce. The fact that the indexes created bullish hammer signals today after touching the 200 day moving average area provided significant information. The hammer signal, one of the 12 major candlestick signals, was a good indication the Bulls started stepping in today. Even more refined was the fact that the 200 day moving average was the obvious level that might act as support, with that assumption, when prices reached those levels, moving to the 10 minute chart revealed more immediately what was occurring in investor sentiment at that support level. Witnessing a candlestick reversal signal at that level on the 10 minute chart allows the candlestick investor to close short positions and add long positions to the portfolio at the exact appropriate trading levels. The 10 minute chart works very effectively in conjunction with the daily chart when prices/trends start moving dramatically into the overbought or oversold conditions.

Numerous bullish reversal signals were created in charts such as NVDA and ROKU. The recognition of those signals pinpoint which trades are going to be most effective based upon the strong candlestick reversal signals. Just because the market had a major reversal today does not necessarily mean all stocks showed strong prospects of an uptrend. AAPL, AMZN, NFLX created charts that showed the selling may have stopped but not any indication any strong buying had occurred. Understanding which candlestick signals provide the strongest reversal patterns allows investors to be in the appropriate trades that are going to produce the best profitability. A positive open tomorrow would create a high probability bounce at least back up to the 50 day moving average/T-line area. The best profitable trading technique is executing the trades in the strongest candlestick charts. This is what constantly allows for the cultivation of being in the best trades at the appropriate times.

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September 30th Market Direction

After trading positive most of the day, although the Dow finished positive, it closed at or below the T-line. This is a very significant factor. It can be easily visually observed that there is no direction in the overall market trend. The simple T-line rule is basically a probability indicator stating that a trend will remain in a direction if there isn’t a candlestick reversal signal and a close backup above or below the T-line. Currently, the Dow indicates the downtrend remains in progress without a close backup above the T-line. The market sideways mode is still in progress. The character of the market is illustrated by trend movement followed by a sustained sideways trading mode, then followed by a trend and again followed by a sideways trading mode. That is the condition of the markets today. This puts more importance on analyzing each individual stock and sectors. Easy candlestick sectors scans can demonstrate which sectors are acting the most bullish or bearish. This makes for logical scanning of individual stocks in those sectors, as illustrated in the recreational vehicle sector.

What continues to produce good steady profits is the recognition of the strong signals and patterns. Our recommendation on VC was based upon witnessing a belt hold signal that was further confirming a J-hook/frypan bottom trending move. Once you learn the 12 major signals and apply that information to reoccurring candlestick patterns, you put the probabilities dramatically in your favor. Identifying strong patterns produces a dual benefit. The patterns produce sustained profitability even if the overall market trend is sluggish. Additionally, the results of a candlestick pattern is usually much more excessive than merely a trending stock price.

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