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September 4th Market Direction

Candlestick charts reveal one major flaw of most investors. They invest based upon what they think should happen! Or what some analyst projects should happen! Candlestick charts illustrate what everybody thinks should have happened. How often investors buy stocks based upon the expectation of strong earnings, but then find themselves in a position that has sold off dramatically after those strong earnings have been announced. The candlestick investor invests based upon what investor sentiment has accumulatively evaluated what the price will do. CONN is a good example. Strong earnings but investor sentiment showed a completely different expectation.

There is only one correct analysis of a price move! That is the accumulative knowledge of everybody buying and selling during a particular time frame. This is exactly what the graphics the candlestick charts reveal. Human nature works the same way time after time. Once you have learned how to analyze what each individual candlestick signal and pattern reveal, you gain a very powerful insight into what human nature usually will do during a price trend. The overall market analysis is much more accurately assessed when knowing what investor sentiment is doing as a trend progresses. Today, the Dow traded lower but it closed above a very to very important trend analytical tool, the T line. The NASDAQ traded slightly lower but it revealed two very important trend factors. The low of the day bounced off the T line, indicating the T line was continuing to act as a trend support. Secondly, the NASDAQ closed at approximately at the same level it opened, forming a day of indecision ,a Doji day. Knowing that today's weakness in the market was merely profit-taking versus a trend reversal allows the candlestick investor to establish positions with much more confidence and aggressiveness. With the indexes closing above the T line today, the high probability assumption is that the uptrend remains in progress. Candlestick charts cut through all the outside rhetoric, trade war possibilities, Supreme Court hearings, etc. candlestick formations are the actual graphics of everybody making buying and selling decisions.

 

 

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

Good Investing,

The Candlestick Forum Team

 


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