October 24th Market Wrap-Up

The wedge pattern in the indexes was being confirmed on a daily basis by the indecisive trading of the indexes. The Dow has demonstrated its lack of direction by trading relatively flat for the past four trading days, keeping the Dow well into the wedge formation. The NASDAQ and the S&P 500 have been trading in a slow upward direction revealing a very important factor. Those indexes are currently nudging the top resistance level of the wedge formation. This provides the prospects of the NASDAQ and S&P 500 breaking out through the sideways trading of the past few months, indicating a new wave to the upside. The upper resistance level will be an important factor to watch in tomorrow’s trading. A deterrent could be the strong sell off from the earnings report in AMZN. The implication of a wedge formation is that there is not any decisive bullish or bearish force to move the indexes out of a sideways trending formation. This also implies the sensitivity of investor sentiment, likely to react either bullish or bearish upon news or tweet related information. When a trend is in progress, negative news will not create a dramatic affect the change a strong bullish trend or positive news will have less the fact when occurring in a bearish trend.

When the markets do not have a definable trend, the advantage of utilizing candlestick charts is identifying the strong bullish or bearish signals, then applying the trend analysis with the T line. Currently, numerous bullish recommendations have been maintaining a steady Eddie trend as long as they continue to trade above the T line. This simple analysis, based upon human nature, allows for profitable trading in market conditions that would whipsaw most investors out of positions.

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Good Investing,

The Candlestick Forum Team