Today’s selling did not indicate any major change of investor sentiment. The indexes closed at or above the T-line, not reflecting any major change of investor sentiment. This is probably profit-taking and shifting of portfolios before the end of the year. Bullish trending stocks remained an uptrend. The stocks that showed sell signals and closes below the T-line should have been closed out, for two reasons. First, a close below the T-line dramatically improves the probabilities of prices heading lower. Secondly, any stock positions that were showing indecisive trading provided opportunities to convert those positions back to cash. A major advantage of candlestick analysis is recognizing what the big money evaluations were being made as far as anticipating which sectors were being analyzed as the strongest sectors going into the first quarter of the new year. This is easily identified utilizing the stocks signals and patterns that are showing the best strength in specific sectors the first few trading days of the new year. This allows the candlestick investor to immediately produce good profits going into 2020.. Although the markets traded relatively sideways for the past two years, the clearly defined tops and bottoms of interim trends allowed for consistent profitability.
The results of patterns produce not only high probability results but extremely profitable returns. This was illustrated today in our recent recommendation on MAXR, producing a fry pan bottom that broke out today. The major advantage of utilizing candlestick patterns is based upon the expected results of what investor sentiment buildup will produce on a breakout of a specific pattern. LK is also in the process of a fry pan bottom breakout potential. Because investor sentiment reacts the same way time after time, century after century, utilizing the expected results of a pattern puts in investor in high probability trades. The patterns also allow for entering trades right at the optimal time for a breakout to occur. This produces a very simple trading strategy. The expected results of a breakout should produce big profits immediately. The lack of a breakout allows for closing out a trade very quickly and moving on to the next high probability trades set up
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
