Candlestick Signal Expedite Stock Market Education
Where do most investors get their stock market education? They are usually trading by the seat-of-the-pants. There is no educational institution that can teach an investor how to invest correctly. The stock market education that most investors receive in the classroom usually instructs us about what is available; what stocks are, what bonds are, what commodities are, etc. There isnít usually a teacher or professor that has decided to leave the high profits of successful investing to go into teaching.
Stock market education has to be learned by experimentation and by learning what to do to identify and take advantage of profitable trades. For some investors this may take years. For many investors, it can never be learned. The reason is very simple. Making rational decisions with our investment funds cannot be filtered out from human emotional reactions.
Understanding how human emotions work contrary to the correct investment decision-making process becomes a valuable asset. The Candlestick signals are the graphical depiction of those human emotions. Being able to identify panic selling and exuberant buying, by viewing a chart and analyzing price movements, will become a huge benefit when it comes to obtaining a solid stock market education.
Making money in the stock market is not a given. The consistently profitable investor has taken the time to learn from other peopleís success. This is where Candlestick signals become your greatest advantage. The signals are the results of centuries of utilizing graphical formations that reveal highly successful reversal situations.
The Candlestick Forum website has always maintained a high level of dedication to teaching people how to use Candlestick signals correctly. Clear explanations about why positions were put on or not put on will produce a much higher comprehension level on the thought process behind each trade.
Additions to the Candlestick Forum staff will include more research personnel who are capable of investigating what companies do. This additional research will be available on the website. It will include more in-depth study on the reasons why Candlestick signals reveal when particular sectors start to bottom out and show buying signals. Once those signals are identified using Candlesticks, studies done on that sector should reveal why new buying is starting to come in and which of the stocks in that sector have the best upside potential. Candlestick charts reveal a tremendous amount of information.
Market Direction - The stochastics for the Dow and the NASDAQ have been in the oversold condition since the first week of January. Tuesday's trading formed a Morning Star signal in the Dow. Monday revealed an Inverted Hammer and Tuesday formed a Bullish Engulfing Pattern that closed more than halfway up the dark candle from Friday. This three-day combination shows a Morning Star-type signal with the stochastics in the oversold area starting to curl up. The logical target now becomes a test of the 50-day moving average. If it moves up to that level, we would evaluate at that time whether there was enough strength in the signals to push through the 50-day moving average. If we see weak signals at that point, it could be anticipated that a failure at the 50-day moving average would now take us down to the 200-day moving average.
The NASDAQ formed a Doji/Harami on Tuesday. A positive open on Wednesday would be confirmation that the selling had stopped. Bullish futures on Wednesday morning should make for some aggressive buying opportunities. Although the 50-day moving average may be an extended move from here, there is a gap from four days ago that could be filled.
A test of these levels should provide two or three days of positive trading. That is usually enough time when identifying some good bullish signals in individual stocks to make a decent profit on a short-term trade. There were several stocks that were showing very strong Candlestick buy signals off of the 50-day or 200-day moving averages over the past few days.