August 28th Market Direction
The lack of decisiveness was once again evident in the indexes, a Doji type day in the Dow, NASDAQ, and S&P 500. This indecisiveness is more apt to create a reaction either bullish or bearish on any news events. After the market closed, it was reported that North Korea sent a missile over Japan. This has knocked the aftermarket futures much lower. A lower open tomorrow will continue to demonstrate the slow drifting downtrend of this market. These market conditions still warrant having both long and short positions in the portfolio. The major benefit of candlestick analysis is the simple scanning techniques allows investors to immediately identify which stocks/sectors are acting the most bullish and the most bearish. The graphic depiction of human nature allows the candlestick investor to have more trading potentials than they will ever be able to handle. This creates an additional benefit. It allows candlestick investors not only to have a good supply of bullish or bearish trading positions, but allows them to cultivate which trades are going to be the most powerful in either direction.
Candlestick charts provide not only directional bias of a trend but identifies which price moves are going to have the most force. This is illustrated in a frypan bottom breakout in LL. Not only did the frypan bottom have a breakout to new higher levels today, but the gap up on the open illustrated there was going to be excessive force in the next price move. Knowing what human nature does time after time allows investors to be in high probability/high profit trade set ups.
We will conduct a "Members Only" chat session tonight at 8:00 p.m EST.
The Candlestick Forum Team
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