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Stock Investing Ideas

As the New Year approaches here are a few stock investing ideas. No matter how successful you were in 2009 go back and refresh your memory on candlestick basics and candlestick trading tactics. The true experts in any field are always well grounded in the fundamentals of their craft. Review your stock investing and trading results with an eye toward stock market analysis. Review both successes and failures. There is always something to learn. Spend some time thinking outside of the box. If you are a stock trader, research a good buy and hold investment. If you are a long term investor, follow the movements of a popular stock to better understand the tactics of the trader.

Stock investing with Japanese candlesticks has been an effective means of technical analysis for hundreds of years. The beauty of Japanese candlesticks is in the methodís simplicity and in its accuracy. Japanese candlesticks do not require higher mathematics and are not overly sophisticated. They are simply useful and accurate. Getting back to basics is always good and refreshing your memory on Japanese candlesticks can lead to good stock market results.

There are two useful stock investing ideas for reviewing the year in stock market investment. There are results and there is process. A results review of stock trades will show winners and losers. A closer look into process will reveal why there were winners and losers. A useful method of review is to sort a list of trades by percent profit. Look at the most successful trade or trading session, a middling day, and the worst performance. The same applies to longer term investments. Whether or not there is realized profit, make a list of previous trades and select from the two extremes and the middle.

In each case ask yourself if you did candlestick chart analysis before buying or selling. If you did not, go back to your records and do the appropriate analysis. Then, decide if you would, today, make the same purchase or sale in a similar situation. Do this for all three instances using candlestick charting. The results of your process review may well be very instructive. What you learn from this exercise can help improve your trading and investing results in 2010. Keep notes and compare them from year to year.

The last of the stock investing ideas is to walk a little in the other personís shoes. The insights gained by a trader thinking a little as a buy and hold investor and an investor following the moment by moment movement of stocks could lead to some of the best stock picks in the coming year. It is too easy to develop a narrow focus in the stock market, especially as the most successful investors and traders often work in selected areas such as the futures market or the currency market. Sticking to given market sectors increases ones expertise in that sector, but it's limiting. The idea of walking in someone elseís shoes gets one to think outside of the box and opens up new investment opportunities.


Market Direction: Where it is the market going to go in 2010?  This is a question most investors concern themselves with during the early weeks of a trading year. However, is that a viable question?  Candlestick analysis provides a much more accurate approach for making money in the coming year.  Obviously nobody knows where this market is going to go.  It was the anticipatory projections of where the market was heading, starting in 2008, that lost most investors huge percentages in their portfolio. When the Dow was trading at 14,000, what was the anticipated targets? 15,000, 17,000, 20,000, everything looked rosy. The fundamentals of many companies appeared as if they could grow much more.

Candlestick analysis does not try to project where prices might move in the future.  The information built into candlestick signals and patterns provide valuable insights into how you should be investing now. Candlestick signals provide the ability to project market moves, sector moves, an individual stock price moves for the near future.  That may be a three week to three month time frame versus a 12 month outlook. Fortunately, the analytical capabilities of candlestick signals and patterns allow for the contiguous analysis of price trends.

 

Dow 2007- 2009

 

What was the general investment prognosis for 2009?  Most professional money managers, after closing out positions in the first quarter of 2009, remained in cash, waiting for the next shoe to drop before recommitting to the market.  This fell into a common observation by Japanese Rice traders. Where do most people sell? They usually panic sell at the bottom.  Their psyche was so devastated, they needed to sit in cash until the markets gave them an opportunity to get back in.

 

The candlestick investor have a completely different perspective of the markets.  When the Dow was trading at 14,000, it did not matter what each individual so-called expert was projecting.  The Japanese Rice traders worked off of one very simple premise. "Let the market tell you what the market is doing!"  When it was projected the Dow would go much higher, the candlestick investor witnessed a different prognosis based upon candlestick signals.  The fourth quarter of 2007 revealed candlestick sell signals.  This produced a portfolio strategy that was oriented toward the short side.  The introduction of the short funds, and the leveraged short funds, allowed for consistent profits as the market continued to move lower.

 

The Dow Jones weekly chart clearly illustrates candlestick sell signals upon retesting major moving averages after they had been breached to the downside.  Another valuable confirming indicator, the eight exponential moving average, known as the tee line, continued to act as a resistance until the first quarter of 2009. During the downtrend, although there were periods of time where a bullish reversal could occur, the movement in and out of the short funds made the long decline a reasonably profitable time frame.  There was not any candlestick sell signals in the fourth quarter of 2007 that would have provided the insights to project the Dow pulling back to the 6600 level.  The profits exploited from the markets were the results of analyzing progressive sell signal conditions during the whole downtrend.

  

The summer of 2008 showed signs of a potential bullish reversal.  But as time went on, the slow curvature of the trading revealed a potential of a Dumpling Top Pattern. A Dumpling Top Pattern is created by  slow indecisive trading that produces an extended round the top formation.  Having the ability to recognize that pattern produced valuable information for the candlestick trader. The description of a Dumpling Top Pattern is slow indecisive trading. This information becomes very useful to a trader.  There are two options one can take in a Dumpling Top Pattern market condition. The indecisive trading is going to warrant extremely short-term scalping or taking the trading funds out of the market completely and taking a break. Taking a break and getting  rejuvenated  was the appropriate strategy especially during the slow late summer months.

 

This may have stopped the flow of profits for a few weeks but there is a great benefit for knowing the results of candlestick patterns.  The Dumpling Top Pattern has a high probability expected result. There is going to be a strong down draft in a price trend at the end of a Dumpling Top. This information allows an investor to make inordinately large profits by shorting the next price move.  It also adds more confirmation the downtrend is still in progress.

 

The Dumpling Top Pattern in the third quarter of 2008 indicated more downtrend.  The Pennant formation in the fourth quarter of 2008 revealed more potential downside.  The Dow finally bottomed out in March of 2009 with a small candlestick cradle pattern.  When the signal appeared, the candlestick investor have a different perspective of what should be done with portfolio positions.  They were coming off of a very profitable downtrend.  They were not licking their wounds, wondering how to repair their portfolio.

 

While most professional money managers maintained heavy cash positions during 2009, the candlestick investor was heavily invested in the markets in long positions.  The Cradle Pattern witnessed in March of 2009 provided an excellent buying opportunity.  This is not rocket science.  Going long in March of 2009 did not involve extensive research.  The bullish signal told investors what was going on in investor sentiment.  These signals have worked effectively for over 400 years.  Fundamental analysis has absolutely nothing to do with price movements.  The perception of those fundamentals is what moves prices.

 

The year of 2009 was extremely profitable.  The markets remained in an uptrend.  A Jay hook pattern formed at the beginning of the third quarter.  The confirmation of that patterns indicated much more upside.  Making profits in the markets is merely taking advantage of the graphic depiction of what is occurring in investor sentiment.  Candlestick analysis allows investors to be in the right direction at the right time.

 

What is the market going to do in 2010?  If somebody tell you that they know what it would do, get away from that person as fast as possible. Candlestick signals and patterns are the cumulative knowledge of everybody buying and selling during a specific time frames.  They work as effectively on the one minute, five-minute, 15 minute chart combination as they do for the daily, weekly, monthly chart combination.  There is an immense amount of information built into candlestick charts.  Whether a fundamental analyst or a technical analyst, applying candlestick analysis to your evaluations will greatly improve the results of your portfolio.

 

DOW

 

Ask any investment expert what the markets should do in 2010, they will give you an answer. The truth is there is no way to anticipate the events of the coming year that will effect vinvestor sentiment. If your investment advisors did not have you in cash or short in 2008, their analytical technique may have a flaw. If they were waiting for the next dip in 2009, there may have been more flaws in their trading techniques. Use the information found in Candlestick Signals. You will make much more money.

 


 
 
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