December 21st Market Direction

Knee-jerk reaction! Was the market ready to reverse because of new virus strains? The candlestick charts could reveal that very quickly in the day. The intraday charts were showing buying after the open. This allowed for candlestick investors to continue to hold long positions with evidence the market was not selling off after the open, but being bought. Also, numerous bullish positions did not selloff on the open but maintained their positive trading above the T line. With the market indexes closing above the T line by the end of the day, this revealed that investor sentiment had not changed as far as the overall market trend. This provided more upside potential in individual candlestick chart patterns when it was evident there was not any bearish sentiment taking over the markets.

The candlestick patterns continue to produce good profitable trades. Also, a candlestick pattern, a buildup of investor sentiment, is less likely to selloff immediately when there is a major change of the overall market direction. The J-hook patterns were clearly evident today. Our recommendation for MGNI and PERI were based upon J-hook pattern setups and could be bought on the first signs of additional buying even though the market had opened much lower. TTCF and MARA, existing J-hook patterns continue their uptrends. The electric vehicle sector gained strength near the end of the day because of the stimulus package. Trades such as BLNK, NIO, SOLO, GP are good electric vehicle sector plays not only for short-term trades but also for long-term holds. Combining daily chart and weekly charts provide a trading strategy that works effectively for the longer-term investor. The candlestick pattern still provides consistent profitability even though the overall market trend remains choppy. Currently, there are no indications of any major change in investor sentiment in the overall market direction, however, it is always prudent to have safety stops at spots that should not see uptrend trading.


Chat session tonight at 8 PM ET, identifying the best sectors.

Good investing,

The Candlestick Forum team