January 9th Market Wrap-Up

The uptrend remains in progress! Some of the talking heads are suggesting this market has now gotten into the exuberance stage. The candlestick charts do not demonstrate any exuberance. Utilizing the T-line as a trend indicator provides a couple of important illustrations. First, it acts as a natural support resistance level with candlestick signals. As long as the indexes continue to trade above the T-line the uptrend is assumed to be in progress. But another aspect of the T-line also reveals when exuberance has started to come into the markets. This is illustrated when the market indexes start moving excessively above the T-line. However, that has not yet occurred. Although the market uptrend has been extensive, it can be visually evaluated that profit-taking has occurred along the way, sometimes intraday as well as occurring in a few days of pullback before the uptrend continues. A steady uptrend in the markets will usually consist of some stock/sectors moving positive while other sectors start backing off. The simple scanning techniques for finding the strongest candlestick trades allows investors to continually take profits in the sectors that have already moved and reallocate funds to the sectors that are showing new strong buy signals.

An additional benefit of candlestick analysis is identifying the signals and patterns that are going to produce the most strongest profitable trades during an uptrend when many stocks are slowly rising in a rising tide. LK is an example of a fry pan bottom/classic pattern that is producing excellent profits based upon our recommendation identifying the fry pan bottom pattern. Profitable option trades can be made with much more confidence in price trends as exhibited in AAPL, maintaining positions as long as it continues to trade above the T line. Simple common sense rules allow investors to dramatically improve their profitability when understanding that investor sentiment works the same way time after time. All boats rise in a rising tide. Simple candlestick scanning techniques allow investors to find the boats that are going to rise a lot faster.

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Good Investing,

The Candlestick Forum Team