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Stock Market Picture Is Worth A Thousand Stock
Analyst’s Words
You have no doubt heard the often-quoted phrase
“A picture is worth a thousand words”. This
is an absolute truism when applied to the
stock market. In that case, however, we would
change the phrase to say “A stock market
picture is worth a thousand stock analyst’s
words”.
This is not stated “tongue-in-cheek”. A stock
market picture, in the form of a candlestick
chart, gives the astute investor an immediate
assessment of the probability for a successful
trade. There is no reason to listen to a stock
analyst or anyone else trying to convince
you to buy the stock. You will know right
away, with a glance at the chart.
Learning our simple Japanese Candlesticks
trading system will enable you to instantly
read the stock market picture on a daily basis.
And we have a new product to help even further
in that endeavor. Read on to see how you can
get a special holiday deal on that new product.
The Stock Market Picture Allows Easy Market
Analysis
A major advantage of Japanese Candlesticks
is that the method tells you in what direction
investor sentiment is moving prices. Not what
“could” be the price direction, but the actual
direction.
As illustrated in the last newsletter, a Spreading
Formation could be identified in the Dow chart.
A Spreading Formation is the exact opposite
of a Pennant Formation. Instead of coming
to a point, it starts small and the highs
and lows exceed the preceding ones. This indicates
a major reversal the majority of the time.
Most technical analysis methods work “most”
of the time, but not all the time. The operative
word is “most.”
When will they not work? Who knows? But that
is where candlestick signals provide an immense
benefit. Whereas Western technical analysis
can project the market direction, candlestick
signals can confirm or detect when a Western
pattern is not going to work.
Take the Spreading Pattern example. Relying
strictly on Western analysis, the assumption
would have been that a major decline was about
to occur. The downturn from approximately
October 15 would have been the time to go
short, the fifth point of the spreading formation.
However, days 6, 7, and 8 of the downtrend
formed Hammers and an Inverted Hammer. Candlestick
analysis recognizes this series of events
as a bottoming formation. Whereas the Western
analyst may have been expecting a major pullback,
the candlestick analyst is prepared to cover
short positions and add longs on the confirming
day. This keeps the candlestick investor from
getting trapped into thinking what should
be happening versus what is actually
happening.
The Stock Market Picture Provides Market
Direction
The candlestick signals are highly accurate
for revealing trend directions. That is all
well and good, provided there is a trend.
As seen for the past couple of weeks, the
market does not seem to have any conviction
one way or the other.
So how do you use the candlestick signals
to tell you what to do? How do you use them
to trade this market? As the ancient Japanese
rice traders said, “Let the market tell you
what the market is going to do.” Currently
this market is telling us that it is not going
anywhere, at least for the past two weeks.
So how do you make money in this type of market?
Usually it is hard to make money in a waffling
market. However, knowing that the market is
flat, new strategies can be incorporated to
take advantage of candlestick signals. First,
remember that the signals are the cumulative
knowledge of all the buyers and sellers participating
in that trading entity during that time frame.
What the market is telling us now is that
there is no definitive direction. How do you
play that type of market? Put on longs and
shorts. If the signals have a high probability
of working, then short the charts that are
showing sell signals and buy the good buy
signals. Even though the market is not moving,
the candlestick signals reveal where the buying
and selling is occurring. Probabilities say
that the shorts will move down and the longs
will go up, even though the market is not
having an influence on direction.
However, with that said, another Evening Star
formation formed on Friday. The stochastics
are still heading down. The indexes did not
reach the levels that would have tested the
upper trend line. The sellers have made their
presence known at these levels. Friday’s weak
market is further confirmation that the buyers
are running out of steam. Be prepared to add
shorts.
The Stock Market Picture Revealed By Our
Sector Scans
By doing our recommended scans, you will find
the sectors that are picking up strength.
This past week the Biotechs appeared to bottom,
the Semiconductors appeared to top out, Retails
consolidated and are starting to move back
up. Having this knowledge allows the candlestick
investor to take advantage of where money
is flowing to and from.
You can make money in a flat market, maybe
not a lot, but you can make something until
the markets start moving in a direction. If
you find that your trades are not working
in this type of market, relax and sit back
for awhile. The point of candlestick trading
is to exploit the moves that are made in the
markets. When moves are not happening, sit
and wait. The markets will show a trend that
can be easily recognized soon, then the big
returns will come back.
Candlestick Trading Forum Question Of The
Week
An often-asked question on the Forum this
week pertained to stop losses. Keep in mind
what a stop loss should do for you. It is
to get you out of a position that is not acting
in accordance with what the signals told you
it should be doing. But remember, the position
was established because all the parameters
had been met.
An example this week was APPX, a buy signal.
After a good run up it backed off a bit, and
a stop loss at $26.00 or below on a close
was recommended. The trade should have been
closed. But the next day the buyers came right
back in.
The same rationale that should stop you out,
that the sellers are in control, should work
also in the opposite direction. Buy again
if the buyers appear to be back in the position.
It is not unusual to be stopped out of a position,
when it looks like the time to be out, and
buy right back again at a higher price when
it looks like the buyers are again taking
control.
Remember, the point of investing is to maximize
the profits in the account, not to maximize
profits from each individual trade.
See The Stock Market Picture Revealed In
45 Different Ways – The Candlestick Trading
Forum Flash Cards Holiday Special
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Forum Flash Cards, have been getting rave
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The Candlestick Trading Forum is a strong
advocate of educating investors about a high
probability method of investing. We also highly
recommend that every parent should be exposing
their children to the world of investing.
Why allow them to become familiar with the
world of investing through “hard knocks” when
they become ready to start investing? Allow
them to become familiar with Wall Street well
before they have to know how to invest.
To help everyone in this endeavor, we have
decided to offer a special deal on the Flash
Cards during this holiday season. Please see
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here to go there now!
Why Now Is The Best Time Ever To Become
A Candlestick Trading Forum Member
Although progress has been much slower on
our new website than we expected, we are getting
closer and closer to it being a reality. As
stated in previous ezines, we plan to "raise
the price of entry" to become a Member
of the Candlestick Trading Forum as soon as
we get the new website ready to go.
We will also be eliminating the 30-day money-back
guarantee, since we will be offering so many
new products and services, we will not be
able to risk giving them all away for free
to Members who are not serious about staying
with us long term.
We have decided to keep the present fee structure
in place until we get the new site operational.
This gives everyone one last "window
of opportunity" to get in now and to
be "grandfathered" into all the
benefits which future Members will be paying
much more for. See our September
14, 2003 Candlestick Commentary for details
of those benefits. Don't lose out. Join today
while we still have the 30-day money-back
guarantee!
For more information, please read about becoming
a Member in the Become
A Member! section of our website.
In Conclusion…
We hope you now realize why a stock market
picture is so important. If not, imagine this
scenario.
You go to the doctor since you have a severe
pain in your back. After waiting in the reception
area for some time, the doctor’s assistant
comes out and tells you “The doctor will see
you now”.
You go have a seat in the doctor’s office,
and he comes in. He looks you straight in
the eye and says “Well, since you have back
pain, you must have a herniated disk”.
I think you would probably grab your clothes
and get out of that doctor’s office as fast
as you could.
Here’s the point: The doctor can’t possibly
know what is wrong with you without taking
an X-Ray, a Cat Scan, an MRI, or whatever
is needed to get a “picture” of the problem
first. Yet, people invest like this every
day, blindly taking the advice of their broker,
stock analyst, etc. without even looking at
the stock chart, and getting a “picture” of
where their hard-earned money is about to
go.
You never have to invest “blindly” again.
The Japanese Candlesticks formations instantly
provide that stock market picture you need
to make a wise investment decision.
So start learning them today, and teach them
to your kids too!
“Taurum per cernua prehende”!
And God Bless!
Good Investing,
The Candlestick Forum Staff
www.candlestickforum.com |
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