Although the indexes continue to trade higher, there is one natural indication to have safety stops in place. The simple scanning process to find the strong candlestick signals and patterns are revealing much better short positions versus long positions. Better in the sense that there is a greater number of good short patterns developing. The simple logic allows the candlestick investor to be ready to close out long positions on any signs of sell signals/weakness and continue a slow process of adding short positions to the portfolio.
The J-hook pattern indicated in the Dow implies there is still more upside. The NASDAQ has not been able to close below the T line. However, the indexes are now in the overbought condition. This does not necessarily mean there is going to be a trend change, but it makes being more diligent for potential sell signals. When you take advantage of the consistent patterns created by human nature, you allow yourself to be better prepared to take profits and reverse portfolio directions. This continues to put the probabilities in your favor of being in the right direction of the markets.
Chat session tonight at 8 PM ET.
Good investing,
The Candlestick Forum team
