The indexes produced some potential candlestick sell signals today. The Dow formed a Dark Cloud signal in the overbought condition. However, it is still trading an uptrend above the 3T line, let alone the T line. This implies there might be some profit-taking pullback but not necessarily a full-scale reversal. The NASDAQ, after forming a Hanging Man type signal yesterday, formed a Shooting Star Doji today. This makes the premarket futures a valuable insight into whether there’s going to be some profit-taking over the next few days. A lower open would imply profit-taking tomorrow. This allows the candlestick investor to make a much more accurate assessment as to whether to take profits in long positions and add a few short positions to the portfolio. Numerous bullish positions showed indecisive/bearish potential signals today. The position cultivation process becomes simple when witnessing potential sell signals in overbought conditions. This allows for candlestick investors to take some profits in the higher risk positions that already have produce good profits and move those funds, either to short positions or long positions that are just now showing bullish signals in the oversold condition. This improves the probabilities for producing better profit potential, with less risk.
Our positioning yesterday in TGI was based upon seeing a Fry Pan Bottom breakout going into earnings. Simple logic, candlestick analysis is the graphic depiction of everybody buying and selling during a specific time frame. If there is strong buying going into the close just before an earnings report, logic implies that people, that know what is going to occur in the company’s earnings, are buying. The probabilities will put you in the right position at the right time. The candlestick patterns continue to work well, Fry Pan bottom’s continue to show good profitability
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Good investing,
The Candlestick Forum team.
