Let the market tell you what the market is doing! This is the advice from the Japanese rice traders. When the indexes showed strong sell signals on Monday and closed below the T line, the probabilities of the market trend change dramatically. A close below the T line produces strong probabilities the downtrend is now in progress. The downtrend will remain in progress until witnessing a candlestick buy signal and a close back up above the T-line. Today’s trading illustrated continued indecisiveness. The Dow bounced off the 50-day moving average but then closed at the T line. The NASDAQ continues to trade below the T-line. This puts the market trend still in an indecisive nature. These are market conditions that warrant having both long and short positions in the portfolio. Long positions can be maintained as long as there is not a candlestick sell signal and a close below the T line. Short positions can be maintained as long as there are not bullish candlestick signals and a close above the T-line.
Candlestick investors have a major advantage. Very simple scanning techniques will allow for immediately pinpointing which chart patterns are producing the strongest bullish strength and the strongest bearish strength. Even when there is not a definitive direction of the overall market, the simple scanning techniques will always find good strong buy positions and good short positions. Currently, there are numerous J-hook patterns in progress, the insurance stocks are showing strong J-hook patterns. AXL is illustrating a bobble breakout, which is a very high probability trades set up.TUP has formed a MorningStar signal right on the 50-day moving average, clearly indicating this is where the buyers were stepping back in. The analysis of candlestick charts allows for extremely high probability trades.
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Good investing,
The Candlestick Forum team.
