The market indexes provided some warning Today. The NASDAQ and the S&P 500 gapped down to the previous day’s trading lows. This is not a bullish indication! If the bulls are in control, the indexes should not be gapping down to the previous trading day low. However, the Dow and the transportation index traded higher. This is now providing the distinct analysis the market is providing specific sectors as strong investment areas while other sectors are showing weakness. The simple scanning techniques of candlesticks allow investors to pinpoint which of those sectors/stocks are acting the strongest. The oil stocks and the transportation stocks are continuing to show good strength, coming up off of strong candlestick signals and patterns.
One of the strongest bullish signals that are not easily recognized is the message signal. It is a strong gap up but profit-taking occurring during the rest of the time period. Fortunately, candlestick analysis provides a very common sense entry strategy and expectation of what is likely to occur after the selling has stopped. This is been illustrated in our recommendation recently of TVTX. The same setup is now occurring in MRIN. Knowing that there is likely to be a steady uptrend, a recommendation in our options room was to buy the MRIN October 10/12.50 call spread for $0.75. The price merely has to move from the $10.50 level to the $12.50 level. We will be doing a free options trading strategy session this Saturday, October 2 to demonstrate how simple spread strategies in the appropriate chart move provides much greater profitability with much less risk. Join us this Saturday, this one-hour training session is free and you get an immense amount of common sense trading information. Click here to register
Chat session tonight at 8 PM ET.
Good investing,
The Candlestick Forum team
