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Stock Value Analysis

Stock value analysis comes in two forms, long and short term. In long term investing the individual does fundamental analysis and looks for intrinsic stock value in the form of anticipated forward looking earnings. In short term stock trading and stock investing traders look for stock price fluctuations using technical analysis with Candlestick patterns. They apply Candlestick trading tactics to profit from these fluctuations in the stock market and individual stock prices. Both types of stock value analysis can lead to profits in stocks. Long term stock value analysis coupled with Candlestick analysis assisted short term stock value analysis can be doubly profitable. The long term investor typically ties his hopes and aspirations to solid stocks with the likelihood of long term growth and the substance to weather economic storms along the way. By using Candlestick patterns as a guide this investor will not only profit from the long term growth of a company but will greatly enhance these profits by adding the stock to his portfolio at the most advantageous price.

Stock value analysis is especially useful and, perhaps, the most profitable after stock market crashes. This is the gblood in the streetsh scenario. Everyone, except those who anticipated the crash using Candlestick charting techniques, has suffered gigantic losses. The general feeling, as opposed to a rational belief, is that things could get worse, the economy could collapse, and that the stock market, much less onefs own stocks, will never recover. Using short term stock value analysis of prices with Candlestick stock charts, the investor and trader can anticipate price changes and pick up the best deals by buying at the bottom. The savvy investor or trader knows that extremes of a market crash often have to do more with a contraction of credit and a panicked psychology of investing than with the true state of the economy or an individual stockfs fortunes. He will buy heavily and profit as the market and individuals stocks recover. The Candlestick devotee will have bought puts on his stocks before the market went south and will, thus, sell at the strike price of his options contracts and purchase promising stocks when they are cheap. He may even buy back the stocks on which he was buying puts just before the crash.

Considering the gblood in the streetsh scenario above we can see that stock value analysis can run full circle. One profits from picking stocks with long term promise and resistance to economic down turns. The investor then uses both long term and short term analysis to anticipate a market reversal. He either sells stock or buys puts to protect himself against loss. Using Candlestick chart analysis he can successfully predict the bottom of a stock price and reinvest his money in stocks with both long and short term promise. Maintaining perspective is critical to successful stock value analysis. Remembering that when there is gblood in the streetsh is often the best time to be hunting for stocks is how many successful investors profit from the predictable ups and downs of the stock market.

Market Direction: Has the selling of the past two days indicated a market reversal or a profit-taking pullback? This is the question always asked when selling comes into an uptrend. The candlestick investor can analyze a trend with a more accurate view when knowing if candlestick signals appeared at the reversal or not. The lack of candlestick sell signals in a reversal area provides completely different information than if a candlestick sell signal has been identified. The lack of a candlestick sell signal will usually indicate merely profit-taking versus a change of investor sentiment.



Today is selling was mostly in the NASDAQ. Wednesday's trading had formed a Doji in the Dow. The S&P 500 formed an evening star signal. However, the NASDAQ demonstrated a hard selling day but without a candlestick sell signal. The selling in the NASDAQ today was much more significant compared to the Dow and the S&P 500. Both of those indexes showed indecisive trading after candlestick sell signals. Although the downtrend probabilities are still relatively high, the strength of the downtrend does not appear to be very strong. This is based upon the lack of collaborating sell indications by all the indexes.

S&P 500


Recognition: A three candle pattern at the top of an uptrend. The body of the first candle is white, confirming the current uptrend. The second candle is an indecisive formation. The third candle is black and should close at least halfway down the white candle.Pattern Psychology: After an apparant uptrend the Bears step in and open the price lower than the previous day's open. The price finishes lower for the day and the Bulls are concerned and begin selling to take their profits.Related Articles: How to Trade the Evening Star Signal Swing Trading with an Evening Star SignalTraining Tutorial: Morning Star & Evening Star Signals

What is the best strategy for these market conditions? Most investors do not have a clear perspective of what to be doing under these market conditions. This is mainly due to the fact that they do not have the insights that candlestick analysis is able to provide. The commonsense elements built into candlestick signals allows a candlestick investor to make a relatively accurate prognosis. This helps establish the correct trade positioning in a portfolio. After the appearance of potential sell signals yesterday, the premarket futures help indicate where a market direction is heading. A lower open after the appearance of candlestick sell signals should instigate the closing of long positions that are looking weak and establishing short positions.

CRUS was a short recommendation on the Candlestick Forum site. It had formed a bearish left/right combo on Wednesday. The bearish engulfing signal closed below the T line. Stochastics were starting to turn down. The gap down on today's open was clear confirmation of the strong sell signal. The Doji trading day of today provides another opportunity to go short if the price opens lower tomorrow. A major advantage of candlestick analysis is that trade strategies are made very easy based upon the expected results after a candlestick reversal signal or pattern breakout.


Please take advantage of the immense amount of information that is built into candlestick signals. Learning the commonsense aspects of candlestick analysis allows each investor to have a high probability game plan put in place. This is whether you are a day trader, swing trader, or a long-term investor. The visual aspects of candlestick analysis makes it easy to identify high profit pattern breakouts as well as when to take profits.

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Good Investing,

The Candlestick Forum Team

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