Although the Dow is trading up well today, it hasn't been able to get up through the T-line. The other indexes are not showing any great strength, either trading below where they opened or trading lower on the day. Yesterday's positive trading in the markets did not create candlestick reversal signals, merely the indication of a bounce in the downtrend.
When you do not know what the market is doing, do nothing! Today's knee-jerk reaction to the upside is now diminishing, the indexes are now trading back below where they opened. Until there is a definite change of investor sentiment, candlestick reversal signals, do not do anything major until the market shows a definite reversal.
Politics is still the predominant pressure on the markets. Today's trading has gapped the market indexes down through any perceived possible support levels. Stochastics are not yet in the oversold condition.
Today's slightly positive trading in the indexes still do not demonstrate any conviction one way or the other. The sideways mode of the market is still in progress, Today that might be a function of waiting for the Fed report. Continue to utilize each individual stock chart as the predominant analysis. The candlestick patterns continue to produce higher probability trade results.
Although the markets are trading positive today, it has to be viewed with a little bit of skepticism. The indexes are currently in a downtrend. Over the past month it can be seen that the down days show decisive candles while up days are indecisive candles. Any bullish positions should be maintaining above the T-line. Short positions can be maintained when there are no reversal signals being confirmed.
Today's trading is a perfect example for illustrating that what ever investor sentiment was doing going into the close one day has nothing to do with what the investor sentiment might be at the open of the next day. Today's weakness in the markets are on the verge of breaching the lower support levels. The Dow needs to close near the top end of its trading range today to maintain the wedge formation.
Candlestick analysis provides simple scanning techniques that not only reveal the direction of prices, but the nature of the direction. Currently, the indexes are not showing any identifiable direction. The Dow is still trading in the compressing area of a wedge formation. The other indexes, after hitting resistance levels have pulled back to support levels and appear to be holding.
Note the relevancy of the T-line today. Not only acting as a support level but more importantly making the current patterns in the indexes to be more relevant. The S&P 500 and the transportation index are hovering right on the T line. The NASDAQ has use the T-line as a support so far today.
Having the ability to analyze a price trend allows the candlestick investor to anticipate what the remaining price move will likely be. Yesterday, the indexes failed to break through observable resistance levels. The Dow, closing lower, indicated its wedge pattern was still in existence. Although the markets started out very bullish today, it had to be suspected that until there was a breach of the wedge pattern to the upside, the wedge pattern was still the predominant analytical factor.
Although the Dow is trading up 100 points, it is still showing difficulty getting up through the 50 day moving average and the downtrending resistance level. However, the other indexes are demonstrating strength going through resistance levels. The overall uptrend remains in progress. There appears to be an underlying confidence for the overall economy.
The Dow and the transportation index are showing resistance at the 50 day moving average, the S&P 500 is showing resistance at the recent high of two weeks ago. The NASDAQ continues to trade higher after the breakout of the resistance level last week.
The slow sideways/slightly uptrending channel in the Dow and S&P 500, although not bearish, is illustrating the lack of any dramatic bullish sentiment. This indecisive trend of the market is being accentuated by indecisive daily candlestick formations.
Cohns resignation has caused the knee-jerk selloff today. Knee-jerk? With the Dow down 163 points, this is approximately one half of the selloff from what the premarket futures were indicating most of last night. The candlestick chart reveals an indecisive formation, a hammer type signal, based upon the Dow trading at the top end of the range so far today.
The Dow is trading lower, the NASDAQ is trading higher, the S&P 500 is flat. This indicates no major change of investor sentiment. The trading of the indexes are all in the midrange of a slow uptrending channel.
When the indexes are trading below the T-line, the downtrend is in progress. Today's excessive selling is offset a little bit by the fact that the NASDAQ is trading above where it opened, albeit still lower on the day. Are the markets trading off because of tariffs? That is the excuse but note that the sell signals occurred two days before the unexpected announcement.
The consolidation of the markets are continuing but not with any great aggressiveness Today. Although the market indexes are trading slightly lower, they are currently forming Doji's. Watch to see if the indexes are supporting at the lower and of an uptrending channel. The transportation index is trading higher, illustrating the lack of across-the-board selling pressure in the markets.