Adding short positions to the portfolio was advertised in the nature of the market indexes. The last two weeks have demonstrated indecisive trading in the Dow. Although it has not yet closed below the T line, each day has demonstrated an indecisive trading signal i.e. Doji’s, hanging man signals. At the same time, the NASDAQ was starting to show indecision but has been more bearish due to it actually closing below the T line. Moving to take profits was made more obvious based upon the changing nature of the market in general. Candlestick signals and patterns provide that visual confirmation well ahead of the actual markets starting lower. The immense amount of information built into each candlestick formation allows the candlestick investor to make much more appropriate decisions well before the overall markets showed definite changes.
When the market is not showing decisive trading, especially in the overbought condition, common sense candlestick analysis allows for shifting a portfolio from predominately long positions to taking profits and adding short positions. This can be easily identified as recommended in going short on bearish chart patterns. AAPL was forming a dumpling top and closing below the T line. ARCT close below the T line last week, forming a potential bearish scoop pattern. SPCE,IMMR and PLCE became short recommendations because of closing below the T line. This is a powerful statistical probability. Witnessing a price closing below the T line dramatically improves the probabilities a downtrend is now in progress. Taking advantage of bearish patterns and a close below the T line dramatically improves profitability by having trades positioned in the correct direction. The Candlestick Forum POWER TRADE training session scheduled for this Saturday has been postponed due to Houston weather.
Chat session tonight at 8 PM ET. No registration needed, click here to connect.
Good investing,
The Candlestick Forum team
