September 3rd Market Direction

The Dow, after trading much lower, closed at the T-line with an indecisive trading day. The S&P 500 closed lower but as a Doji just above the T-line. The transportation index also closed right above the T-line. However, Today’s indecisive candlestick formations in the indexes provided a more obvious revelation. The indexes closed back in the indecisive trading range that has been developing over the past month. This candlestick chart graphic demonstrates there is still not any decisive trend in the overall market. Additionally, the sideways trend of the market has been created by whipsaw movements on any given day to the upside or the downside, based upon the most recent tweets and headlines. This obviously makes maintaining long or short positions very difficult. Fortunately, candlestick charts reveal which stocks/sectors are maintaining consistent bullish trends or bearish trends. The graphics of candlestick charts pinpoint which sectors/stocks can be maintained in a portfolio when the majority of stock positions are whipsawing up and down.

The most important trend criteria remains the combination of candlestick signals and patterns staying above or below the T-line. This combination provides extremely powerful trend indication. Although the number of bullish or bearish chart patterns are greatly reduced in these market conditions, the number of good bullish or bearish trades can be quickly identified based upon candlestick scanning techniques quickly finding more good trading set ups than most investors can utilize. 10,000 trading entities will always produce identifiable candlestick trades. The T-line becomes an important trend maintenance indicator once positions are established. The simple rule of the T-line equates to knowing that the uptrend in a price is maintained after a candlestick bullish signal as long as a sell signal and a close below the T-line does not occur. Simple rules created by Japanese Rice traders centuries ago are still relevant today when investing utilizing human nature as the ultimate trend indicator.

We will conduct a “Members Only” chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team