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December 3rd Market Direction

Do candlestick charts reveal when a big bullish day is going to occur? Most likely not! But the candlestick charts allow investors to be in the correct positioning when a big price move does occur. Today's positive trading may have been the result of the delay of China tariffs, but the candlestick charts would have had the portfolios strongly to the bullish bias based upon the buy signals and the continuation of the uptrend going into today's trading. The candlestick investor does not have to be an astute analyst to predict the direction of a price or trend. The candlestick investor merely identifies the signals and patterns that are the result of everybody else's analytical expectations. The Dow gapped up through the 50 day moving average today, indicating the 50 day moving average was not likely going to act as a resistance level. However, the Doji in the Dow produced suspicion that the downtrending channel of the past two months of trading might be a viable resistance level again. Will this area resist? Because of the simple rules applied to candlestick signals, such as a Doji rule, candlestick investors have a much more accurate trading strategy based upon how prices move after a Doji. A lower open would be confirmation the downtrending resistance level was going to continue to act as resistance, at least over the next few days.

Being able to analyze elements of a sector allows investors to see where bullish or bearish sentiment is likely to occur in individual stocks. Today, crude oil gapped up through the T line, in the oversold area, after a series of Doji's. This is a very high probability reversal of crude oil is downtrend. This makes for a good alert for analyzing individual oil stock charts. The probabilities improve dramatically when knowing there is a major change of a whole sector. WLL, WTI, and WHD gapped up through the T line after a series of Doji's, a high probability bullish reversal. OAS as well as other oil stocks produced bullish kicker signals. When witnessing very strong bullish signals in a large number of stocks in a sector, it reveals a very important message. There has been a dramatic change of investor sentiment in the whole sector, not merely an individual stock. This greatly improves the probabilities of being in strong positions in the correct sector. Candlestick analysis is merely the graphic depiction of where investor sentiment is producing the strongest bullish charts or the weakest bearish charts.

 

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

Good Investing,

The Candlestick Forum Team

 


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