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Daily Market Comments - September 2006


9/29 - Stock Market Comments

Thursday's selling early in the day, followed by buying in the afternoon, showed the healthy uptrend still in progress along this upper trend channel. The morning furtures still show buyers in this market, albeit without any great enthusiasm, but it indicates the uptrend should still be in progress. Crude oil prices are definitely affecting the fate of the equity markets. After trading higher most of the day on Thursday, crude oil prices finally came back down to the lower end of the trading range, indicating that the downtrend may still be in progress for crude oil. Continue to hold long positions and watch what occurs along this upper trend channel.

9/28 - Stock Market Comments

Everybody is watching to see if the Dow will close above the 11,720 area, the all-time high. In the process of doing that, the Dow is bobbing along the top end of its trading channel. Continue to stay long but be nimble. The great expectation of closing at record highs can be dashed. A failure to do so could cause 'disappointing selling', everybody selling off because the market could not get to a new high. Watch what type of formations the candlesticks produce at these levels. Obviously, a strong bullish candle is required as evidence that the top of the trend channel is not going to act as resistance anymore. Be prepared to take profits on the short term trades as selling comes into these markets going into the close.

9/27 - Stock Market Comments

The Dow has moved from the bottom of its uptrending channel to the top of its uptrending channel  in two days. This was accomplished by two strong bullish days and the fact that the uptrending channel is getting narrower. This morning's futures indicate weakness. Once again, the top of the trend channel needs to be watched to see if it's going to act as resistance. With the channel still in an uptrend, trying to trade long and short is becoming difficult. Pullbacks to the bottom of the channel are doing so in a much shorter time frame. Keep watching the top of the trend channel to see if there is going to be strength to push it through that level in the next few days.  

9/26 - Stock Market Comments

The positive trading on Monday saw both the Dow and the NASDAQ at the bottom of their trading channels. Now watch to see if this trading channel doesn't continue its slow uptrend in the markets. Unless we see some severe selling early today, short positions should be watched very closely and stopped out immediately if they are showing signs of strength. This becomes a very difficult trading market with the trend of the market in a slow uptrend. This makes holding long positions more reasonable, closing  them out at the top of the trading channels and buying back in at the bottom the trading channels.

9/25 - Stock Market Comments

The futures this morning are showing some buying. This is probably due to the weakness in crude oil prices. The weakness seen in Friday's trading was confirmation of the sell signals that formed in both the Dow and the NASDAQ on Thursday. Despite this morning's strength in the futures, still watch for a day or two more to the downside in the market trends. The 20 day moving average should be the likely target for both indexes. The short positions should be the predominant trades for the next couple of days. However, the pullback in these markets may be limited.

9/22 - Stock Market Comments

The uptrending resistance level in the Dow and the NASDAQ was obviously the critical level. After Wednesday's last surge up to the trend line, it became apparent that the Bulls could not push through that level. The hard sellooff on Thursday created Bearish Engulfing signals in the NASDAQ,  S&P 500, and the Russell 2000. The Dow did not form a true Bearish  Engulfing signal. However, it revealed the important information we  were looking for. The upper trend line resistance was not going to be  breached. Expect a test of the bottom of the trend channel over the  next few days. Take profits on long positions and add short-term short  positions.

9/21 - Stock Market Comments

A strong bullish sentiment seen early in the day on Wednesday  was not deterred after the Fed announcement. Once again, both indexes  are nudging the top trading channel. Although both indexes are in the  overbought condition, any signs of weakness have been consistently  negated during this uptrend. A breakout through this trend channel  should start bringing some enthusiastic buying into the  markets. Continue to be nimble while holding long positions.

Continue to watch for a candlestick sell signal in the indexes.  Until the markets can break through the top of the trend channel, it  still acts as resistance with a potential that the Bulls could finally  break and the Bears start taking over.

9/20 - Stock Market Comments

Tuesday showed a Hanging Man signal in the Dow and a Bearish  Engulfing signal in the NASDAQ. Although the markets are opening  positive today, watch for resistance at the top of the trend  channel. Continue to hold long positions but still be prepared for a  reversal at the top of the trend channel. 

9/19 - Stock Market Comments

The indecisive trading on Monday was still maintained along the  upper trend channel that both the Dow and the NASDAQ has formed over  the past six weeks. This morning's futures were given some strength due  to the inflation report. As of now, although the markets are in the  overbought condition, there have not been any definite sell signals.  Continue to hold long positions until a strong sell signal becomes  evident in the markets. With the uptrend being tentative, adding a  short position or two to the portfolio is still prudent.   

9/18 - Stock Market Comments

The Dow sold off near the end of the day on Friday, forming  almost  a Shooting Star signal, but not quite. The NASDAQ closed higher but  still formed an indecisive Spinning Top-type signal. Both indexes are  trading at the top of their trading channels. Stochastics are in the  overbought condition. These are conditions where you should be ready to  take profits upon seeing decisive weakness in the markets  today. Pre-market futures are showing the moderate weakness in the Dow  but the NASDAQ remains relatively flat. Continue to stay long but be  prepared to take profits today if the selling starts to take  control. Crude oil prices formed a Doji/Hammer on Friday, indicating a  potential bounce in price early this week. That could cause some  sluggishness in the equity markets for a few days. 

9/15 - Stock Market Comments

The Dow sold off slightly on Thursday while the NASDAQ held steady.  This implied profit-taking during an uptrend. Both the Dow and the  NASDAQ have come back up toward the top of their trading channels. The  pre-market futures are showing good strength. Continue to hold long  positions but watch how the market closes today. Today's trading needs  to see the strength continue into the close which would bring the  trading up above the top of the trading channel that has been forming  for the past month and a half. A weak close after a strong open today  would indicate that the top of the trend channel was going to continue  to act as resistance. Crude oil prices are continuing to show weakness  while interest rates continue to stay relatively low.

9/14 - Stock Market Comments

The uptrend continued with early consolidation on Wednesday followed  by buying in the afternoon. The indexes are now trading at four-month  highs. Both the Dow and the NASDAQ are approaching the top end of their  trading channels. After the strong rally of the past three days,  witnessing some consolidation with profit-taking will not be  unexpected. Continue to hold long positions until definite sell  signals appear. The weakness in crude oil prices and the strength in  bond prices have been diminishing investor anxiety.

9/13 - Stock Market Comments

The markets moved in an upward direction and did so with much more  energy than expected. The Dow and the NASDAQ closed at recent highs.  Stochastics have curled back up. After the bounce off the 20 day moving  average, both the Dow and the NASDAQ have moved right back up toward  the top of their trading channels. After the strong up-move on Tuesday,  expect some consolidation in today's trading but the uptrend should  still be intact. Most of the short positions  were stopped out in  Tuesday's rally. Continue to hold long positions until a candlestick  sell signal indicates that the uptrend is over. The lower crude oil  prices as well as lower interest rates have dramatically reduced  investor anxiety.

9/12 - Stock Market Comments

The markets opened up weak on Monday, but closed at the higher end  of the trading range. The Dow pulled back and just touched the 20 day  moving average before bouncing back up. The NASDAQ opened lower, near  the 20 day moving average, and formed a Bullish Engulfing signal by the  end of the day. This created more evidence that the 20 day moving  average was going to act as support in this slow uptrend of the  markets. As it appears that the markets are not in any hurry to move in  one direction or the other, maintaining  long and short positions in  the portfolio is the proper strategy. On Monday, the sector indexes  showed strong sell signals in the oil and gas area, the mining area,  and gold and steels. The semiconductors showed bullish signals.

9/11 - Stock Market Comments

Positive trading on Friday produced a Bullish Harami in the Dow  right on the 20 day moving average. This provided the possibility that  the uptrend would remain intact using the 20 day moving average as  support. This morning's futures are showing enough weakness to  negate the positive trading of Friday. A lower open this morning  followed by immediate selling would indicate that Friday's positive  trading was just a reaction bounce at the 20 day moving average. The  QQQQ's appear to be opening at the same open of Friday. Immediate  weakness from that level has the potential of forming a  Kicker signal  to the down side. This would become strong evidence that the downtrend  that started last week was still in progress. Continue to add short  positions to the portfolio on immediate weakness this morning. 

9/8 - Stock Market Comments

The effects of the Evening Star signal and the Kicker signal was  seen yesterday in the markets. The selling   brought both the Dow and  the NASDAQ back very close to the 20 day moving average. Stochastics in  both indexes have curled down and indicate more downside. Another  bearish day in the markets today would breach the 20 day moving average  and more than likely make the 50 day moving average the next likely  target. An indecisive trading day such as a doji or a hammer day,  keeping prices above the 20 day moving average, would indicate that a  trend channel was likely in progress. Continue to add some short  positions to the portfolio.  The sectors that are acting weak will  continue to show weakness.    

9/7 - Stock Market Comments

Yesterday's futures showed a substantial selling bias before the  open.   The NASDAQ formed a kicker signal to the downside.   The  uptrend in both the Dow and the NASDAQ   was clearly reversed with the  kicker signal in the NASDAQ and an Evening Star signal in the Dow.    The longer term trend may not have been reversed but the short-term  trend definitely reflects a pullback possibility of the 20 day moving  average for the Dow as well as the NASDAQ.   Anticipate further  weakness from these levels for at least the next few days.   Add to the  short positions, take profits in long positions that have started to  roll over.      

9/6 - Stock Market Comments

The weakness in the futures this morning might be showing some  indications of the markets getting toppy.   Stochastics are in the  overbought condition.  Expect some profit taking after the uptrend of  the past few weeks.   But unless the markets finish weak today, the  trend should still be the predominant factor.   Would not expect to be  aggressively buying first thing this morning.   The uptrend will  persist if the markets do not close near their lower end of the trading  range on the day.

9/5 - Stock Market Comments

After the doji forming in the Dow on Thursday, the market had the  opportunity to go into either direction.   The doji had formed right at  a recent high.   As we saw, the Bulls were still in control, taking  prices up above the recent highs.   The NASDAQ formed a doji on Friday.    It closed near the high of the first of July.   Both indexes are in  the overbought condition.   The NASDAQ has the potential of testing the  200 day moving average.   Today  is usually the first day of the Fall  trading season.   Everybody is back from vacation.   Volume should pick  up.   It would not be unusual to see some consolidation after the light  volume rally that has occurred over the past few weeks.   Currently the  uptrend should still be in progress but be nimble.   There may be some  portfolio shifting with the new money coming back into the market.  Continue to hold long positions until a severe reversal signal appears  in the markets.

9/1 - Stock Market Comments

The Dow formed a Doji yesterday at the recent high of mid August.    A weaker open today would have represented of failure at the top,  creating a double top.  However, this morning futures are trading  positive after the labor report.   A strong open today will need to see  a strong close to continue the uptrend. what does not need to be seen  for the Bulls is a strong open followed by a weaker close, creating a  dark candle or a bearish signal.   The NASDAQ still has a potential of  testing the 200 day moving average.   Interest rates keep dropping.    Crude oil prices are trying to bottom but are not showing any great  strength.   Continue to hold long positions until a dramatic sell  signal appears in this uptrend.          

 

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