What makes a trading program viable? A truly effective trading method requires one simple aspect. It should work in all market conditions. Candlestick analysis has that feature. It does not rely upon specific market conditions for it to work correctly. The elements that make candlestick analysis work in all market conditions is one universal factor, human emotions. It does not rely on formulas. It does not rely on extensive technical analysis knowledge. It is merely the visual interpretation of what occurs in investor psyche during all aspects of market trends. Why is today's newsletter referring back to the basics of candlesticks? Because the results of the signals produce profits in all market conditions. Furthermore, candlestick analysis makes for a much more clear interpretation of those market conditions. It is easier to project which direction the market, in general, is moving using candlestick signals. With that knowledge, finding the high profit stocks/sectors are much easier to evaluate knowing which direction the market is moving.

The Candlestick Forum tries to maintain an educational point of view when demonstrating the effectiveness of candlesticks. The signals dramatically reduce the amount of emotions involved with investment decisions. The market conditions, during the past few months, have invoked much more emotional response from members of the  Candlestick Forum website. This indicates the manner in which the information is being conveyed apparently has been too mild-mannered. There should not be emotional trauma when utilizing candlestick signals. The utilization of candlesticks should show what is occurring in the market trend. The emotional trauma is the result of expecting and hoping for market results. Candlestick analysis eliminates that trauma if you are using the information correctly. Knowing what the market is doing allows investors to partake in profits produced by what the market is doing. Investors that lose money consistently are those that are waiting for the market to do what they are expecting it to do.

Having the ability to analyze what is going on in investor sentiment based upon the signals allows for huge profits to be made, no matter what the market conditions. Huge profits were made at the bottom of the downtrend back in early October. The Dumpling Top prepared for a strong downtrend. This downtrend was profited by being shorting positions  or owning the short funds. Knowing the simple rules of the signals and how they are formed at the bottom of the trend created  very profitable trading situations. Trades that produced 40%, 60%, and 80% returns in the matter of two or three days. Since early October, the markets have basically traded sideways. However, witnessing strong candlestick signals in specific stocks/sectors have also produced huge profits.

DOW

The past two weeks have basically seen a sideways moving market. Candlestick signals have identified strong buy patterns in a number of stocks. This may be the result of the baby being thrown out with the bathwater. Hedge fund liquidations have been selling the good positions along with bad positions. This has created the opportunity to buy oversold positions that demonstrated the potential of a strong rebound. Recent recommendations in the Candlestick Forum members area have produced profits in the 50%, 75%, and 100% gains over the past two or three weeks. There have been an inordinately high number of recommendations that have produced very large profits. This is not being stated for the cause of tooting one's horn. This is to illustrate the effectiveness of candlestick signals. Although the market is up over the past couple weeks, it did not move in a manner that would be conducive for most trading programs. However, candlestick signals revealed where the strength was coming into specific stocks and sectors. Effectively analyzing which signals were about to produce strong upside potential also showed which stocks were maintaining that strength through some strong market whipsaw action.

The Candlestick Forum maintains a very low key style for recommending stock positions. The major purpose of the site is to educate investors on how to use the signals correctly. Unfortunately, the profitable results gets lost when it is not touted with the enthusiasm seen from other investment websites. It is not unusual for the recommendations put out by the Candlestick Forum to show an extremely high percentage of the recommendations showing good profits. Along with those recommendations, there will be a good number of positions that are producing well above average returns.

WRI for example, was recommended as a buy anywhere from $8.50 to $11.50, based upon the evidence of buying and its dividend payout. At $8.50, the $2.10 annual dividend provided a 24.7% yield. At $11.50, the dividend yielded 18.2%. This recommendation  was for a longer-term more conservative investment account. Today it closed at $18.65, up 62% to 119% over the past two weeks, based upon where it was bought. There are other recommendations in the portfolio with comparable returns. Does this mean candlestick signals always creates these type of returns? Definitely not, however it dramatically improves the likelihood of being in one of these positions when the big returns do occur.

MTZ - another recent recommendation

Please utilize the information on the Candlestick Forum for your benefit. The stock picks are not for the purpose of making you wealthy. The daily videos of the pics and the follow-ups will educate you on what to look for and how to interpret the signals correctly. This is something that can easily be learned. Once you know this information, you can control your own investment returns for the rest of your life.

Chat session tonight at 8 PM ET.

Good investing,

The Candlestick Forum Team