The markets continue to trade in the sideways wedge formation but with a current upward bias. Today’s positive trading in the Dow brought the hard selling of Friday backup above the T-line. But more bullish credibility was seen in the transportation index trading up strong while at the same time the NASDAQ and the S&P 500 were showing good strength after bouncing up off the T-line area. Trading in the middle of the wedge formation provides the prospects of some sideways, noncommittal trend direction. However, as long as the markets are not showing any dramatic selling, individual candlestick chart patterns will continue to demonstrate the direction of their movement based upon the bullish charts staying above the T-line and the bearish charts staying below the T-line. Currently, there are numerous J-hook patterns and frypan bottom patterns that are producing consistent trends.
Candlestick patterns are created by the build up of investor sentiment. The build up of investor sentiment in a particular stock price overrides the sentiment demonstrated by the general market indexes. That evaluation essentially produces a favorable trade for the candlestick investor. The lack of any major affect of the overall market indexes allows for investor sentiment to continue a price move in individual stock charts. This provides a much more accurate evaluation for each individual stock chart/sector. Simple candlestick scanning techniques reveals which sectors are gaining the most strength during an uptrend or the most bearish sentiment, allowing for both long and short positions to be profitable when the markets in a sideways trading mode. Currently, good profits are being made in shipping stocks. The weed stocks have produced good short positions. The graphics the candlestick charts allow investors to pinpoint the most profitable trade set ups.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
