The Dow produced a more compelling reversal signal today. After trading higher and resisting at the upper resistance level, the selling started and brought the Dow back down through the T line and created a bearish left/right combo. This would imply higher probabilities that more selling is about to occur. However, although the probabilities favor lower trading, the nature of the market, over the past month, has been indecisive, up one day, down the next. It will be important to see what the premarket futures illustrate as far as how the markets will open tomorrow. Although the NASDAQ was trading higher today, it closed at the lower end of its trading range, creating a Doji type signal. The transportation index traded much lower. This combination of signals produce more evidence of the bears taking control.
The J-hook pattern remains the predominant pattern in these market conditions. Last week the J-hook pattern produce good profits in the oil stocks. Currently, numerous J-hook patterns are forming in biotech stocks. The indecisive nature of the overall market trend continues to make price movements very sector specific. Some sectors are going to be trading stronger while other sectors will be trading lower. This can be easily identified with simple scanning techniques for candlestick patterns. The patterns can also point out which trading stocks have the best upside potential’s, such as TSLA in the process of a J-hook pattern set up. NFLX is in the process of forming a classic pattern, a fry pan bottom pattern followed by a J-hook pattern. Take advantage of the patterns. They illustrate not only a high probability of the direction of a price move but also have the advantage of producing very strong profit moves. This is what provides huge advantages for the candlestick investor.
Chat session tonight at 8 PM ET, identifying the best sectors.
Good investing,
The Candlestick Forum team
