The nature of candlestick signals allow for a much more accurate read as far as overall market trend direction. The Dow has experienced numerous Doji trading days over the past couple of weeks, showing indecision in the overbought area. The NASDAQ actually formed a bearish engulfing signal last week followed by a bearish Doji sandwich with today’s trading closing below the T line and the 50 day moving average. This alerts the candlestick investor to be ready to close out long positions that are starting to show weakness, even though they may not have closed below the T line. This is more relevant for the options trader that does not want to give up profitability after seeing prices starting to selloff. Fortunately, simple scanning techniques allow for the identification of the strong sectors, as seen in the electric vehicle sectors, even though the market in general might be getting toppy.
The bearish signals, as seen in KSS, a dumpling top, which is the bearish version of a fry pan bottom, provides good evidence of which stocks can be shorted with much greater expectations. The bearish kicker signal, as seen in SPLK, would produce a strong probability short no matter which way the market is moving. The candlestick investor gains a huge visual advantage by identifying which stock/sectors are going to continue to produce bullish trades and which sectors will provide the strongest short trades. Join us tonight as we utilize spreads to take advantage of price moves when the market direction is getting a little bit iffy.Chat session tonight at 8 PM ET. Chat session tonight at 8 PM ET.
Good investing,
The Candlestick Forum team
