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Daily Market Comments - February 2006

2/28 --  Stock Market Comments

The Doji that formed on Friday in the Dow provided an opportunity for the sellers to take control of the market. Monday showed that the sellers were not in the markets. The NASDAQ closed right on a descending  trend line on Friday. If it had failed that level, the obvious assumption would be that the trend line was once again acting as resistance. However, Monday's trading in the NASDAQ showed a gap up through the trend line and continued with a bullish candle. This demonstrated that the trend line was now not a factor in the uptrend. A new buying dynamic has come into the market. On any pullbacks in the NASDAQ, look for the trend line to act as support for the uptrend. Crude Oil prices and Natural Gas prices have not shown any strength. Although the prices bounced last week, the candlestick formations reveal that the buying was not strong. Lower energy prices could be the catalyst for the next leg up in this market. Continue to hold the long positions.

2/27 -  Stock Market Comments

The market showed some healthy consolidation on Friday. In the face of some doubtful news going into the weekend, the Dow came back up to the top end of the trading range and the NASDAQ closed positive. This gave an indication that major selling had not come into the market yet. Although Crude Oil prices bounced on Friday, they are showing continued weakness today. Investor sentiment is still mildly bullish. This is in an investment environment that makes the strong sectors perform that much better. As long as the market trend continues flat or positive, investor sentiment in the current strong sectors will continue to get stronger. Continue to hold the long positions. 

2/24 -- Stock Market Comments

Earlier this week, the Dow experienced an Evening Star signal. This represented some potential selling coming into the markets. Wednesday showed another bullish day which either negated the Evening Star signal or became the Bullish Engulfing signal at the top. Remember, a Bullish Engulfing signal witnessed in overbought conditions means it is time to start watching for a candlestick sell signal. Thursday's Bearish Harami now puts more credence on the Evening Star signal. This is creating some evidence that the sellers may be stepping up a little at these levels. Today's agitations in the oil markets could keep the buyers from stepping up aggressively. Although the Dow is getting a little toppy, the NASDAQ seems to be holding up well. This produces the evaluation that there might be some money shifting from one sector to the next for the near term. Look to take profits in the sectors that are starting to show weakness. Adding a short position or two to the portfolio may be prudent. 

2/23 -- Stock Market Comments

What could have possibly been an Evening Star signal that formed on Tuesday was negated by the positive trading on Wednesday. The uptrend should continue as buying was seen in all of the indexes. However, with the markets being in the overbought condition, and the appearance of an Evening Star signal in the Dow, investors should watch for any other sell signals appearing over the next few days. Confirmation of the uptrend will require some non-sell signals. Crude Oil prices continued to show weakness. This could be a catalyst for equities to move higher. Continue to stay long but be more diligent in watching for additional sell signals. 

2/22 -- Stock Market Comments

Both the Dow and the S&P 500 formed Evening Star signals on Tuesday in the overbought conditions. The NASDAQ sold off, making the downward trading channel much more obvious. Expect some continued selling today. The magnitude of the  selling will illustrate whether a pullback is in the making. A strong  selling day today would reveal a pullback, whereas a Doji or  Hammer-type day would indicate just a pause in the current uptrend. On  Tuesday, Crude Oil prices gapped up in the morning but did not show any  strength after it opened. Any weakness in Crude Oil prices today could  indicate that the short-term bounce is over. Until a severe sell signal  is obvious in the general market indexes, continue to hold the long  positions and take profits on positions that are starting to roll over.

2/21 -- Stock Market Comments

The markets  consolidated on Friday but did nothing more than show mild  profit-taking. Crude Oil prices did the anticipated bounce but did not  phase investor sentiment. Although some of the indexes formed potential  sell signals, the stochastics are in a strong upward direction. This  would require that the sell signals witness confirmed selling to mean  anything of significance. However, this morning's futures reveal that  the buyers are still in control. Continue to hold the long positions.  Oils and mining are strong sectors.

2/17 -- Stock Market Comments

The continued strength in the markets is still a function of a  Spreading pattern seen in the Dow chart. There is a high probability  that we will be in a strong uptrend for the next few weeks. The other  indexes, although not showing any strong patterns, have been trading  sideways for the past two months. A breakout to the upside of that  trading range in the near future would confirm the buying sentiment  that has come back into the market. Crude Oil prices appear to be  taking a bounce to the upside today as indicated by the Bullish Harami  in the Crude Oil chart on Thursday. However, a bounce in price at these  levels should not create negative investor sentiment. A short-term  bounce should not cause the equity markets to react  negatively. Continue to hold the long positions. 

2/16 -- Stock Market Comments

The market had a very good opportunity to consolidate on Wednesday  after the strong day on Tuesday. However, it finished the day with  relatively good strength. Crude Oil prices dropped dramatically again  in its downtrend Wednesday. The new Federal Reserve Chairman seemed  well accepted and what he said could be well  understood. Hewlett-Packard's earnings beat expectations. The Dow is  coming out of a Spreading formation. It closed at a recent high  Wednesday. This all leads to the  possibility, as a Spreading formation  indicates, that a strong rally might be in the making. Continue to hold  the long positions.

2/15 -- Stock Market Comments

We had a nice surprise for Valentine's Day. Although only a slow  uptrend was anticipated, Tuesday's trading showed that the Bulls were  ready to buy on any size of good news. The Dow has closed very close to  its recent highs. The NASDAQ is not showing any great trend other than  the fact that the trendline that acted as resistance during December  now appears to be acting as support in January and February. Continue  to hold the long positions. The biotechs are still acting relatively  strong. Crude Oil and Natural Gas prices continued to move in a  downward direction.

2/14 -- Stock Market Comments

Happy Valentine's Day! The markets are now in a sideways trend, with  no direction. The NASDAQ and QQQQ are right on previous recent lows,  with stochastics in the oversold area. Anticipate a slight  positive movement from this area, but not with any great  magnitude.Crude Oil is still heading lower. That could soon be the  support for the equity markets. Continue to stay long in the strong  sectors.

2/13 -- Stock Market Comments

The up and down movements of the market's indexes over a few days  while the stochastics have moved into the oversold area indicate that a  bottom may be forming. The NASDAQ appears to have supported at the  recent bottom of mid-January. The Dow continues to show decent  strength. Continue to hold the long positions. 

2/10 -- Stock Market Comments

The early strength seen in Thursday's trading disappeared by the  closing bell. Although the Dow closed up slightly, the other  indexes revealed weakness. This gives indications that the markets do  not have a direction and will move in a sideways manner in the near  future. The Dow chart is clearly showing a slow bottoming action. This  may be in effect for the next few weeks. Crude Oil prices and Natural  Gas prices are still dropping but are now well into the oversold  conditions. Fortunately, there are still sectors in the markets that  are acting very well on the long side. Continue to hold the long  positions that have not shown weakness. There is still a good amount of  bullish interest in this market. 

2/9 -- Stock Market Comments

The Bullish Engulfing  signal in the Dow was a clear indication that the selling had  stopped. The downtrend in the Dow started with a non-candlestick sell  signal, which was an indication of the pullback not being very  severe. The Bullish Engulfing signal on Wednesday was a good signal  that the uptrend will now continue with some decent force. Continue to  hold the long positions. Crude Oil prices and Natural Gas prices appear  to be heading lower, which should give some more strength to the equity  markets.   

2/8 -- Stock Market Comments

The NASDAQ, as well as the QQQQ, are both on a major support  level. The stochastics are not quite into the oversold area yet. The  Dow had the opportunity to show some strength after the Doji from the  prior day but sold off late in the afternoon. This morning's futures  are showing a positive open. Currently, the markets are all trading in  a sideways trading range. The current downtrend may continue for a few  more days until the stochastics can all reach the oversold area. Crude  Oil and Natural Gas prices continued to drop hard on Tuesday. By this  time, the toppy positions should have been stopped out.    

2/7 -- Stock Market Comments

On Monday the Dow  formed a Doji/Harami. This could be an indication that the selling has  stopped. All of the other indexes revealed indecisive trading signals.  Look for buying confirmation over the next couple of days to indicate  that the pullback is over and the uptrend is continuing. Crude Oil  prices and Natural Gas prices continue to show weakness. The Crude Oil  chart illustrates a Double Top over the past few weeks. More weakness  in the energy area should add strength to the equity markets.    

2/6 -- Stock Market Comments

Friday continued the selling that started on Thursday. However, none  of the indexes experienced a candlestick sell signal. This should give  the implication that the sell-off may not have any extensive force  behind it. As can be witnessed, the Dow is creating a trading channel  that is moving sideways. There is not any massive selling in the  markets. This can be analyzed by the fact that there are numerous  stocks/sectors still moving in a positive direction. Continue to hold  the strong positions. 

2/3 -- Stock Market Comments

Thursday's selling came from a rumor that a new security alert was  going to be put into effect. However, when that rumor was denied, the  buyers did not come back into the market. Although the markets are  selling off, there have not been candlestick sell signals. This would  imply that a selloff should be short-lived. The Dow closed right on the  50 day moving average Thursday. Watch for an indecisive trading day in  the markets today. If so, it would suggest that the selling is  over and the markets should start moving back up next week. Continue to  hold the long positions.  

2/2 -- Stock Market Comments

On Wednesday it became apparent that the 50 day moving average was  going to act as support in the Dow. Once the Dow touched the 50 day  moving average, the buyers started coming in. The other indexes have  all shown good strength also. Crude Oil prices showed weakness  after the Bearish Harami. Weakness in the energy area should add  strength to the equity markets. The Dow has formed a Spreading  pattern. This current uptrend should be held until a severe sell signal  appears, which might be a few weeks away.

2/1 -- Stock Market Comments

Where did January go?  The indexes consolidated with the greatest consolidation occurring in  the DOW. The NASDAQ, S&P 500, and the Russell 2000 did not show any  severe consolidation. That should make for some healthy backing and  filling in a strong uptrend. The expected news from the Feds should not  be any great deterrent on the future outlook of equities. This  morning's futures are showing a positive bias even after GOOG missed  their earnings. Continue to hold the long positions.


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