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March 7th Market Wrap-Up

The direction of the overall market is easily analyzed utilizing candlestick signals that have powerful implications. This past week, the Dow as well as the other indexes demonstrated a bearish left/right combo signal. This is a Doji followed by a bearish engulfing signal. It has very simple implications. The Bears have definitely taken control after an indecisive trading day, the Doji day. The bearish engulfing signal reveals the strength of the new direction. In addition, the strong bearish left/right combo is followed by a bearish Doji sandwich. In most cases, the bearish Doji sandwich showed trading closing below the T line. This combination of sell signals made it very clear, based upon the historic results of what a price trend will usually do after the signals, that a downtrend was definitely in progress. The candlestick investor, upon witnessing the starting of the sell signals, can move with a lot more aggressive manner is far as closing long positions and adding short positions.

Putting all the stars in alignment is simple. If you could see the market in general is creating strong sell signals, the simple scanning techniques of candlestick analysis allows you to start scanning for the strong individual stock sell signals. This is merely going with the flow. Any long positions during a bearish market trend will still require very compelling bullish charts to stay long but the big profits will occur in shorting positions when the market is selling off. Candlestick scans identify those high probability short trades.



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Good Investing,

The Candlestick Forum Team

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