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January 3rd Market Direction

The graphics of candlestick's will usually indicate what investor sentiment has anticipated to be as the strong sectors going into the next year. However, because of the strength of the existing rally, the sectors that had been showing strength due to the election had already shown good results. Today's positive trading is indicating those sectors are continuing with good strength. The oil sector and the shipping sector are showing good across-the-board strength on this first day of trading for 2017. That is a good indication those sectors are going to continue their uptrends. Applying an evaluation to a sector that may or may not be influenced by an underlying commodity provides immensely more clear analysis of where investor strength is moving to. A good example was witnessing strong bullish confirmation in the oil stocks sector when crude oil showed a strong reversal early in the day. That divergence provides valuable information. Knowing that crude oil went from trading positive early in the day but finally closed much lower on the day usually creates bearish sentiment and/or selling in oil stocks. Numerous oil stocks continue to trade higher today. This was good candlestick charting confirmation that bullish sentiment remained in those stocks in spite of crude oil trading lower. The graphics on candlestick charts allow investors to make much more accurate analysis of what is occurring in specific sectors.

Specific candlestick signals allows daytraders to take advantage of high profit and hide probable trade set ups. As illustrated in the MBLY chart, a Doji sandwich was setting up as of Friday's trading. The results of a Doji sandwich set up can be easily confirmed based upon how trading opens after a Doji. The expected results provide a high probability expectations, both for establishing a longer-term trade as well as a date trade set up. Because investor sentiment creates the same recognizable patterns over and over, the candlestick investor can produce steady profits by knowing what should be expected from a Candlestick pattern/signal.


Chat session tonight.


Good Investing,

The Candlestick Forum Team

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