The nature of the overall market trend can sometimes be confusing based upon the day to day trading. Today’s trading formed a bearish Harami, giving the possible indication the buying of Friday had come to an end. Fortunately, for the candlestick investor, the addition of the T-line into the analysis allows for better assessments as to what the overall investor sentiment is doing. The fact that the market indexes continue to trade above the T-line dramatically improves the probabilities the bullish sentiment of the market is back in progress. The combination of candlestick signals and the use of the T-line, the T-line being a natural support and resistance level of human nature, produces a very powerful and accurate evaluation of what a market/price trend will do. The use of the T-line in conjunction with candlestick signals dramatically reduces the prospects of being whipsawed in and out of a position.
A major advantage of candlestick analysis is being able to identify which stocks/sectors are working the strongest or weakest during a market trend. As illustrated in today’s trading, the charts/ETFs related to the biotech sector illustrated money coming into that sector. This allows for pinpointing the strong stocks in that sector. With the supply of over 7800 stock trading entities, candlestick charting techniques allow for identifying very quickly which stocks have the best upside potential. Even when a market trend is in an upward direction, Candlestick investors gain a huge advantages by surpassing merely uptrending stocks during an uptrend but identifying which stocks have the most strongest upside potential. Currently, the assumption is that the market is back in an uptrend now that is trading above the T line. Simple candlestick scanning techniques reveal the biotech sector is gaining inordinate strength. Logic dictates having a few biotech positions in the portfolio.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
