Stock Market Investing With Candlestick Analysis
Stock market investing becomes extremely accurate when using Candlestick signals. The signals become the basis for when and if the markets have reached resistance or support levels. Stock market investing requires one main element. Which direction is the market moving! That information becomes much more evident when analyzing simple chart formations.
The key element for successful stock market investing is to have the portfolio positions in the direction of the overall trend. This may be a simplistic statement, but consider that most investors do not have a grasp for which way prices are moving. Stock market investing should not be a hit-or-miss operation. It should be putting as many probabilities as possible in the favor of an investor. Utilizing the information incorporated into the Candlestick signals creates a huge advantage. The major signals become crucial criteria for making successful trend analysis. Stock market investing should not involve ‘hoping' that the stock purchases will move in the direction anticipated. Every time a position is put in place, it should be done because the probabilities were in favor of a profitable trade.
Market Direction - Successful stock market investing can be accomplished by aligning a very few indicators. The signals become the forefront for predicting reversals. The conditions of stochastics add credence to what the major signals are indicating. Adding other technical indicators such as moving averages or trend-lines makes the evaluation of reversal signals that much easier to interpret.
The Dow chart illustrates all those elements. Once the eye recognizes conditions where a reversal may occur, the analysis of which direction a portfolio should be positioned will become much easier. As illustrated in the Dow chart, the bottoming formations, Bullish Engulfing signals, in the last week of August, coincided with stochastics being in the oversold condition. Also, a trend line could be drawn up through the recent bottoms. This produced the opportunity and the confidence to enter trades that were showing good bullish Candlestick signals.
This week the Dow reached the recent tops at the 10,700 level. Stochastics were just coming into the overbought condition. A Doji formed right at that level. This provided a very simple analysis. One rule of thumb is that a trend will usually move in the direction of how prices open following a Doji. That made for a very easy analysis for Tuesday's strategy. Had prices open higher and continued through the 10,700 level, it would be obvious that level was not a resistance any more and the uptrend would continue. A weaker open, as we saw, revealed that the day of indecision, the Doji, was now being confirmed and that the sellers had taken over.
The close of Tuesday, at the lower end of the last bullish candle, formed an Evening Star signal with stochastics turning over. This becomes clear evidence that the 10,700 level has once again acted as resistance. That was the time to start taking profits. Wednesday's trading brought the Dow right to the 200 day moving average. Is this a full-scale reversal or a profit-taking pullback? That will be better answered upon seeing whether the 200 day moving average acts as support. If it doesn't, the next target becomes the obvious trend line.
The portfolio positions should have implemented taking profits on chart patterns that were indicating ‘sell' signals at the top of their trends upon seeing the Evening Star signal forming. Adding some short positions in the past couple of days was suggested. Will this market pull back enough to make the short positions worthwhile? That is not known yet, but the evidence indicates more selling. That could be for two more days or two more weeks. Having short positions in place will take advantage of a sell-off no matter how long or short. If the markets support at the moving averages, probabilities dictate that the short positions should still work while long positions are also performing. Worse case scenario, if the market turns around, bouncing off of the 200 day moving average, the short positions can be covered immediately.
Currently, the stochastics indicate more downside movement. The moving averages could act as a congestion area. When a trend has indicators that could be conflicting, being long in some positions and being short in some positions should still produce net profits each day for a portfolio.
( Sankawa Yoi No Myojyo )
The Evening Star pattern is a top reversal signal. It is exactly the opposite of the Morning Star signal. Like the planet Venice , the evening star, it foretells that darkness is about to set or that prices are going to go lower. It is formed after an obvious uptrend. It is made by a long white body occurring at the end of an uptrend., usually when the confidence has finally built up. The following day gaps up, yet the trading range remains small for the day. Again, this is the star of the formation. The third day is a black candle day and represents the fact that the bears have now seized control. That candle should consist of a closing that is at least halfway down the white candle of two days prior. The optimal Evening Star signal would have a gap before and after the star day.
The uptrend has been apparent.
The body of the first candle is white, continuing the current trend. The second candle is an indecision formation.
The third day shows evidence that the bears have stepped in. That candle should close at least halfway down the white candle.
The longer the white candle and the black candle, the more forceful the reversal.
The more indecision that the star day illustrates, the better probabilities that a reversal will occur.
A gap between the first day and the second day adds to the probability that a reversal is occurring.
A gap before and after the star day is even more desirable. The magnitude, that the third day comes down into the white candle of the first day, indicates the strength of the reversal.
A strong uptrend has been in effect. The buyers can't imagine anything going wrong, they are piling in. However, it has now reached the prices where sellers start taking profits or think the price is fairly valued. The next day all the buying is being met with the selling, causing for a small trading range. The bulls get concerned and the bears start taking over. The third day is a large sell off day. If there is big volume during these days, it shows that the ownership has dramatically changed hands. The change of direction is immediately seen in the color of the bodies.
Steve Bigalow's Book 2, "High Profit Candlestick Patterns" is in the finishing stages. The chapters are now at the formatting editors. The complete book should be at the printers within a few weeks. The distribution date will be announced shortly.
Autumn Special - Gaps represent enthusiasm to get into a position to the point that investors will pay prices away from any of the trading range of the previous day. Understanding how to exploit the information that a gap reveals provides opportunities to make huge trading profits. Order the training CD "Gaps at the Top" or the training CD "Gaps at the Bottom "at $69.77 and select your choice of any other Candlestick Forum training CD, up to an $88.77 value, for FREE! The 'Gaps' training CDs will provide valuable insights on how to use Candlestick signals more effectively. You choose the CD that you would like in addition to the "Gaps at the Top" or "Gaps at the Bottom" CD.
Private Training Sessions: The analysis of what one market can do to another is easily evaluated when using Candlestick signals. The process for projecting market direction becomes relatively easy when a Candlestick investor can utilize the signals to evaluate all the markets that might be affecting the stock market. The better one can analyze the market direction, the much greater the profit potential.
Steve Bigalow spends a good amount of time during his two-day private training sessions demonstrating how to use the Candlestick signals to accurately evaluate market trends. Adding this information to the identification of high profit signal patterns allows an investor to control the profitability of their portfolio for the rest of their investment career. Don't miss the opportunity to gain some valuable knowledge first hand. The Candlestick signals produce an immense amount of analytical information. Whether trading stocks, commodities, Forex, or tulip bulbs, Candlestick analysis will dramatically improve your profitability. This information is taught in a very easy-to-understand manner.
The September training session is full. Another session is being scheduled for October 1st and 2nd. If you are interested in spending two full days with Steve Bigalow, learning all the nuances involved for successfully utilizing Candlestick signal information, do not miss the opportunity provided in a two-day training session. The information that you will gain from a training session will stay with you for the rest of your life. You gain control of your investment capabilities. The seating for these sessions is very limited.
If you would like to talk to private session students for their feedback, or would simply like more information on the training sessions, please contact us by email. We will provide you with all the information you require for attending the next class. To contact us by phone, please dial our toll free number: 1-866-251-4015. Contact us now, spaces are filling up fast.
Monday Night 'Members Only' Chat Session � The next Monday night chat for members will be on September 19th. The topic will be "Money Management". Members, we'll see you Monday night at 8:00 p.m. Eastern time.
Thursday Night Open Chat Session - Everyone is invited to attend our Thursday night chat sessions. Please tell all of your friends! The next Open Stock Chat will be scheduled for Thursday night, September 15th, at 8:00 p.m. Eastern time.
The Major Signals Educational Package - NOW ON DVD!
The response to the 12 major signals CD training program has been astounding. There has been strong feedback that the in-depth analysis of each major signal is done in a clear and concise manner. The learning process becomes very easy when all the elements of what makes for a strong successful reversal signal to work correctly is explained by Stephen W. Bigalow. Each 45-minute training session not only explains what indicators confirm the effectiveness of each of the major signals, but it goes into the investor psychology that was present that made each signal occur. Understanding the psychology of investors when a reversal is occurring is a tremendous insight into what makes prices move.
A New Twist to an Old Favorite!
DVDs of the 12 Major Candlestick Signals - For those of you that would like to thoroughly analyze the 12 major signals, the signals that will perform more reversal patterns prospects than most investors will be able to utilize, the eight hours of concise analysis for each signal is now on DVD's. For the investor who likes to get comfortable in front of their TV screen, this DVD set will provide the opportunity to relax and learn at the same time.
Over $509 of valuable Candlestick signal education, for identifying the most powerful Candlestick reversal signals, is now priced at:
Do not delay, gain the understanding of how prices move. This is information that you will be able to use for the rest of your life. The profits that this information provides can be made in your account month after month after month.
You should never be put in a position where you do not understand why trades are being made for your account. Whether those positions are being put on in your managed account, or a hedge fund, or your own personal trading, you should have a full understanding of whether those funds are being put in the right positions at the right time. The Candlestick signals applied with Candlestick analysis will become the education process for understanding how to maximize your potential returns in your own trading or being able to analyze whether a money manager has any concept of correctly timing the markets.
- The Candlestick Forum Staff