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May 14th Market Direction

The strength of an uptrend can be much more accurately analyze using candlestick charts. Although today's trading in the markets were positive, the candlestick formations revealed potential selling pressure. The Dow formed a small shooting star signal. The NASDAQ and S&P 500 closed positive but below where they opened, creating indecisive Doji type days. The potential weakness demonstrated by candlestick signals become more relevant when they occur in the overbought condition. This does not necessarily mean the uptrend is over, but implies there might be some profit-taking occurring over the next few trading days. This allows for much more accurate trading based upon being more scrutinizing as far as analyzing signals in individual positions.

Analyzing ETF's allows investors to have much more clarity as to which sectors are moving with either bullish or bearish direction. LABU formed a nice frypan bottom breakout, indicating the biotech sector should have some good individual stock charts. The oil sector continues to demonstrate strength. Having the visual capabilities of analyzing where the bullish strength is being applied allows candlestick investors to have heavier weight of positioning in specific sectors. This all leads to the very simple/common sense aspect of investing, having investment funds allocated to the high probability trades set ups.

 

 

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

Good Investing,

The Candlestick Forum Team


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