Stock Market Research Commentary - Candlestick Signals Provide Insights
There are thousands of so-called experts that provide Stock market research commentary each day, week, and month. The majority of that stock market commentary is based upon somebody's analytical projections/speculations of what might happen in the future. Much of this analysis is based upon the information provided today. Unfortunately, those projections can change dramatically based upon some external event occurring in the worldwide markets or in a specific industry. That means that all stock market research commentary has to be taken with a grain of salt. However, analyzing the candlestick signals provide an immense amount of information that can be used during any time frame. Additionally, the candlestick signals will show you an immediate alteration of the existing market conditions.
The candlestick signals make for a clear evaluation of what investor sentiment is in the markets at this time. The analysis of the signals provided by the current investor sentiment creates a high probability trend projection. The duration and magnitude of that trend can be projected using other indicators that worked relatively successfully in the past. Indicators such a stochastics, moving averages, trend lines and a multitude of other technical indicators they usually has statistical relevance. The candlestick charts clearly demonstrate these changes.
The advantage of candlestick signals provides an alert when that projected trend has new elements that have changed investor sentiment.
Being able to analyze what signals were occurring at any point of a trend allows the candlestick analyst to execute trades at the optimal points. Being able to analyze market conditions, using all investment factors that will influence the results of your investments, keep putting the probabilities of producing good returns highly in the candlestick investor's favor.
A simple analysis this past week was evaluating what the price of crude oil would be doing. As noted in the chart, the downtrend from the candlestick sell signals came back to the reasonable target, the 50 day moving average, and did not hold that level. At the same time, both the Dow and the NASDAQ charts had been showing some toppy signals, doji's and shooting stars, indicating that the uptrend may be ready to experience to pullback.
The crude oil chart formed a bullish engulfing pattern that produced an analytical advantage for the candlestick investor. Stochastics were oversold on the crude oil chart. The bullish engulfing pattern came right back up to the 50 day moving average. What do we want to see following a bullish candlestick pattern? Confirmed buying!
Had new buying come in to the crude oil prices the next day, which would've told us that a reversal had occurred and it had done so right at the 50 day moving average.
However, the fact that we saw all prices move lower immediately the following day was a clear indication that the buyers were not willing to step in yet. The sellers were still in control as indicated by the trading the next day at the lower end of the bullish engulfing pattern. Although the stochastics indicate where an oversold condition, there has yet to be seen a confirmed buy signal. The downtrend will remain intact until a confirmed buy signal becomes evident.
Having that information makes stock market commentary a little easier. The next target on crude oil could be the 200 day moving average. If that's the case, the recommendation to stay long in the markets has another reason. Lower oil prices will increase investor confidence. As of now, with no evidence of selling in the Dow or the NASDAQ, holding the long positions is still the right strategy.