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July 27th Market Wrap-Up

The reversal signals were revealed early in the day with candlestick charts. The Japanese Rice traders conveyed graphically when a top was likely to occur. Where do most people buy? A buy exuberantly at the top. This was illustrated most convincingly in the NASDAQ. It gapped up on the open in the over bought condition. The S&P 500 had a slight gap up. Adding the fact that the transportation index was selling off exceedingly hard made the gap ups in the overbought condition more suspect. This is exactly why the morning comments indicated that the red flags were evident, get ready to start taking profits. The exuberance was also illustrated in AMZN and FB gapping up excessively in the overbought condition. Because the stocks are well followed, those were also indications of exuberance coming into the markets. This is not rocket science! This is simply identifying what usually occurs in human nature.

The huge bearish engulfing/left right combo in the NASDAQ creates a very high probability prospect there will be some profit-taking over the next few days. The transportation index is likely going to head for the 200 day moving average, a day or two more to the downside. Because human nature provides reoccurring signals and patterns, identifying the possibility of a reversal today was not difficult. Additionally, the market trends of some of the well followed stocks,AAPL,NVDA, TSLA, were providing indications of candlestick reversal signals. Knowing what each reversal signal requires for confirmation allows the candlestick investor to be prepared to take profits at appropriate times.



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Good Investing,

The Candlestick Forum Team


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