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August 10th Market Wrap-Up

What is different in today's trading compared to three days ago? Investor sentiment! The Doji day of Tuesday produced the first alert that there was indecision in the market indexes. The Dow has traded positive for approximately 12 days in a row. The Japanese Rice traders pointed out that after 10 trading days in one direction, the probabilities become extremely strong that a reversal should be expected. The Doji provides valuable information as far as indicating when a change of investor sentiment is about to occur. The simple Doji rule produces an immediate confirmation, especially when a market trend is well in the overbought condition, when a change of investor sentiment is imminent. Today's bearish trading was merely the confirmation of those signals. The magnitude of today's trading in the markets could produce a quick bounce tomorrow but until there is now a major bullish signal, the downtrend should be in progress.

Simple scanning techniques provide a logical assessment as to whether bullish or bearish sentiment is becoming more pronounced. The past few days of trading have indicated much better bearish signals than bullish signals, even though the overall market trend had not yet reversed. Just like the bullish frypan bottom pattern indicates when a huge upside move is about to occur, the same is true to the downside when witnessing a dumpling top pattern. Adding the prospects that the markets are in the process of reversing and identifying high profit sell patterns puts the candlestick investor in the appropriate direction at the correct time.


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Good Investing,

The Candlestick Forum Team


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