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December 4th Market Direction

The Dow up another 58 points, another bullish day? Not so bullish when you see the visuals of a candlestick chart. Friday produced a Hanging Man signal in the Dow and S&P 500. Although the Dow traded higher today, it close below where it opened, revealing that the selling had started before the end of the day. The S&P 500 created a bearish left/right combo, a very strong candlestick reversal signal. The NASDAQ close down 72 points, also creating a very bearish left/right combo. The passing of the tax bill over the weekend had exuberant buying coming into the markets prior to the weekend. Beware of buying on the rumor, selling on the news. The candlestick investor strategy should be watching more diligently for individual stock charts that are starting to create bearish signals. The visuals of candlestick analysis provides a much more clear indication of change is occurring in investor sentiment, allowing for the repositioning of portfolios to protect from being overexposed to one side or the other.

There are strong bearish patterns that allow for taking advantage of big price moves to the downside, just as there is for identifying bullish patterns preparing for strong upside moves. SQM has been in the process of creating a dumpling top, the opposite of a frypan bottom. This makes the probabilities of having a profitable short position in place that much greater as well as the prospects for a big profit trade based upon a strong downside move coming out of a dumpling top. Knowing the individual candlestick signals and patterns allows investors to be much more prepared for taking advantage of price moves that have had historic results. The big traders, AMZN, TSLA, NVDA, have produced huge profits to the short side over the past few days of trading based upon very identifiable candlestick sell signals. These signals have worked effectively for hundreds of years. That is why we are looking at them today.

 

 

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

Good Investing,

The Candlestick Forum Team


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