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March 9th Market Wrap-Up

The Dow Jones chart provides a very clear example of seeing what the nature of investor sentiment. The Dow has sold off for the past six trading days but with very indecisive selling, Doji days. This demonstrates that there is not a decisive selling pressure on the market indexes. It also implies the pullback is merely profit-taking versus full-fledged selling. This type of pullback usually indicates the next wave to the upside will start on the first bullish candle. This would also confirm the classic pattern, a frypan bottom producing a strong price move followed by indecisive selling, setting up for a bullish J-hook pattern.

Simple scanning techniques allows for identifying which sectors are acting the strongest. LABU, the leveraged ETF for the biotech area, positive trading is confirming the bullish signal of yesterday, keeping the uptrend above the T-line. The next target should be to the top of the trend channel, in approximately the $57 area. Knowing what to expect, based upon the candlestick signals and confirming indicators, allows for strategic option strategies. Knowing where the next price target should be, putting an option spread in place becomes much more advantageous. It dramatically improves the returns while reducing the amount of capital exposed. the candlestick investor also has the advantage of knowing that if an ETF is trading in an upward direction, profitability can even be further enhanced by identifying which individual stocks in that sector have the most bullish chart patterns. The information built into candlestick signals and charts allows for much greater price evaluation than any other charting technique. Candlestick analysis not only identifies the direction of a price move with great accuracy, simple scanning techniques also pinpoint where the most strongest stocks/sectors are performing.

 

Chat session tonight at 8 PM ET, Jeffrey Kennedy presents "How to Incorporate Candlestick Analysis with the Elliott Wave Principle". Click here to register.

Good Investing,

The Candlestick Forum Team


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