May 21st Market Wrap-Up

The market trend remains with the same characteristics it has been exhibiting for the last two months, oscillating trading, up one day, down the next. Fortunately this is beneficial to the candlestick investor. The overall market trend remains in a slow upward direction, trading in a trading channel. As long as investor sentiment does not show any major reversal, the slow up trending nature, albeit oscillating from one day to the next, provides a much stronger trading environment. Without any evidence of severe selling, the bullish candlestick patterns, such as the fry pan bottom and the J Hook pattern, produce much stronger profitability without the fear of any strong selling in the overall market. Simple candlestick scanning techniques pinpoint which sectors are acting the strongest. Currently, the oil stocks have been moving up steadily with crude oil rebounding backup to the $34 area. Specialty retail stocks have been showing great strength. This week, the weeds stocks started showing strong bullish patterns. Having the visual candlestick evidence of where the most bullish strength is occurring allows investors to concentrate trading funds into the strong price moves.

Being able to identify which sectors are the strongest, the candlestick investor has the opportunity to scan those sectors to see which individual stock charts have the strongest bullish chart patterns. This is putting the stars in alignment. Identifying the bullish candlestick patterns produce two major benefits. First, it identifies with a high degree of probability the direction of a price move and secondly, those price moves will move with much greater strength than merely up-trending price moves in a slow up-trending market. Until there is a dramatic sell signal and a close back below the index T-line’s, it has to be assumed the uptrend remains in progress.

Chat session tonight at 8 PM ET with Stephen Bigalow. Click here to register.

Good investing,

The Candlestick Forum team.