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August 14th Market Direction

The bullish Harami that formed in the markets on Friday, after a hard selling, provided the possibility that the selling had stopped. Today's trading not only provided a positive trading day but a gap up from the Harami signal of Friday. Additionally, with the bullish Harami confirmation, the indexes close backup above the T-line. The aggressive buying signals during the uptrend can be witnessed approximately every 4 to 5 weeks. With the market indexes closing backup above the T-line, the prospects of the uptrend continuing remains high. What could've been an extensive selling/profit-taking stage of the market was nullified with today's trading backup above the T-line. The graphics of candlestick charts provide a much more clear indication of what is occurring in investor sentiment. The occasional profit-taking makes the uptrend much more solid, eliminating any exuberance in the markets.

When the market itself produces a potential J-hook pattern, the same pattern will usually be identified in numerous stock charts. Knowing the results of a J-hook pattern allows candlestick investors to identify the high profit/high probability trades set ups. It also allows candlestick investors to move more aggressively, reversing short positions and identifying which long positions have the greatest prospect of profitable price moves if the market starts moving up in its next wave. When these profit-taking stages of the market occur, simple scanning techniques allow candlestick investors to identify which new sectors might be gaining strength.

 

We will conduct a "Members Only" chat session tonight at 8:00 p.m EST.

 

Good Investing,

The Candlestick Forum Team


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