Candlestick Trading Forum
keyword search

Candlestick Trading Forum

Stock Market Timing With Japanese Candlesticks

Stock market timing is the ultimate goal for most investors. Whether you are trading your own account online at home or managing funds, stock market timing is an essential element for maximizing your profits. However, most of the so-called investment "experts" will tell you that you cannot time the market. If Stock market timing can not be done, how come we know the names of Warren Buffett and George Soros? Stock market timing can be done easily when you understand the 12 major Japanese Candlestick signals.

Having the understanding of the psychology that formed the 12 major signals, you then have the understanding of how investor sentiment dictates the reversals in the market. Trends move in cycles. That is made apparent by the fact that we have Fibonnacci numbers, stochastics, Elliott waves, and numerous other indicators that tell us when a trend is overbought or oversold. Fundamentals do not move a price of a stock. The perception of what those fundamentals will be, move a stock price. Stock market timing is made very simple to understand when viewing candlestick signals. The candlestick patterns can be applied directly to the indexes themselves or an analysis can be made of other markets that would influence the stock market indexes.  Analyzing candlestick charts makes evaluating trend direction very easy.

Market Direction - The Dow showed some strength this week due to the crude oil prices appearing to get toppy. Toppy is the sense that the charts indicated that they were having a hard time pushing the price of crude oil much over $40 a barrel. This was in the face of the experts projecting that crude oil prices could go to $50-$60 a barrel. This should once again be a clear illustration of why you look to see what the candlestick signals are telling you versus what the experts are telling you. For those of you that are old enough, remember back in the 1980 time frame when gold prices went from $140 an ounce to $800 an ounce in about a one week period. If you remember what the experts were telling us then, the price of gold was going to $2000 an ounce. They came up with all these wonderful reasons why gold should go to that price. The day after gold hit $800, it went back to $500, and two weeks later it was trading at $200 an ounce and traded there for the next 10 years. Let the charts tell you what the prices will do. As can be seen in the crude oil futures price, the harami's informed us that the buying had stopped. After two or three attempts to take the prices well above $40 a barrel, the harami showed that the sellers were stepping in.

Crude oil prices was one of the major reasons that put fear into the growth of the stock market. Once the reaction to $40 plus a barrel crude oil prices was addressed by the OPEC oil ministers, crude oil prices started dropping rapidly. The initial targets for adding new supply to the markets is in the low $30's per barrel. The Harami's were telling us that the smart money was anticipating something to be done about high crude oil prices. Analyzing other investment vehicles such as the US dollar, the Eurodollar, the Japanese yen, and bond prices is also visually easy to do when you're using candlesticks signals. Having other indicators to analyze what the stock market indexes will do can give you additional confirmation as to what the direction of the market should be.

What do the indexes tell us? After a strong jobs report on Friday, there was a good amount of buying most of the day in both the Dow and the NASDAQ. Without candlestick signals, looking at the results would have indicated a bullish day. Analyzing what the candlestick signals revealed show that the NASDAQ, although up for the day, created a shooting stars signal. This occurred as the stochastics were in the overbought area, starting to turn down. This is not a bullish sign. The Dow, although up for the day, closed just below the 50 day moving average, also with the stochastics in the overbought area. Logic would tell us that if the jobs report created a strong buying sentiment, that sentiment should have remained into the close.


Candlestick Trading Forum