Candlestick reversal signals at obvious resistance levels produced a strong indication the bullish sentiment had reversed. Currently, the Dow, NASDAQ and S&P 500 are all trading below the T line. The Dow and S&P 500 are in a wedge formation, indicating the lack of any major direction. The NASDAQ, trading below the T line produces a strong probability that a down-trending trend channel is in progress. The downtrend in the markets make shorting stocks or sitting in cash the high probability trading strategy. However, there are still bullish chart patterns producing profits. Utilize the T line as your last criterion. The strength of the crude oil stocks was based upon the strength in crude oil over the past few weeks. However, crude oil produced a bearish Harami today, indicating the buying had stopped. Numerous crude oil stock charts have now shown sell signals, making this a good place to take profits. The retail sector is showing numerous bearish J-hook patterns. Go with the flow, utilize the bearish J-hook patterns to anticipate wave three to the downside.
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Good Investing,
Stephen Bigalow
