Based upon candlestick analysis, although the market indexes traded positive during the day, they may not have produced any reversals. This involves having all the indicators in alignment. The stochastics are still just heading down into the oversold condition. This would imply some more selling possibilities. The NASDAQ and the S&P 500 did formed bullish Harami’s, which will now require bullish confirmation on the opens tomorrow. The Dow did not form any major reversal signal, a good indication that the bottom may not be in yet. However, today was an indication that buying was starting at these levels. Any positions in the portfolio can be maintained by using the T-line as the final factor, long positions need to stay above the T-line, short positions need to stay below the T-line.
There are some J-hook patterns working well in this possible bottoming action. Auto manufacturers are showing strength as seen in NIO and LI. Any establishing of new long positions should have very compelling by signals or patterns. Short positions can be maintained as long as there is not evidence of bullish signals and a close above the T line. Overall, these market conditions warrant being less aggressive for establishing new positions until the markets show a definite direction. This would make staying in cash a good strategy, having dry powder ready for the next market/sector moves.
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Good investing,
The Candlestick Forum team.
