Stock Market Forecast Made Easy With Candlestick Signals
Every day on the financial news stations, there is a professional investment adviser or analyst that is giving their stock market forecast. Every stock market forecast is different. One analyst will say that the market is going down because interest rates are going up. Companies cannot improve their profits when interest rates are going up. The next analyst will say the market is going up because interest rates are going up. The rates are going up because the economy is getting better. Which stock market forecast do you listen to?
The Japanese always say “Let the market tell you where the market is going “. Anybody can make a stock market forecast. The Japanese Candlesticks signals give you the simple analysis advantage of projecting the market’s direction. Understanding what the signals tell us gives us a reliable platform for making market direction projections. Use this knowledge to your advantage.
The remarkable results from candlestick signals are not a fad or a fluke. Hundreds of years of statistical analysis, well before the advent of the computer, is incorporated into the signals that we look at today. If you want a stock market forecast that you can rely on, use the stock market forecast that you analyze for yourself. The signals tell you what the market has an extremely high probability of doing. Exploit that knowledge.
Market Direction - May 1, 2004 started a period, in the NASDAQ, of definite indecision. Since May 1, the NASDAQ produced numerous Dojis, Spinning Tops, Hammers, and Inverted Hammers. There was no direction in the market at all. This was one of those rare times when staying in cash was the best strategy. This is not the normal recommendation when using candlestick signals. 99% of the time there will be plenty of long potentials and plenty of short potentials. They are not hard to find when you have 9900 trading entities that your scans can search through. However, that one remaining percent of the time involves market conditions where a trend, even very short-term, cannot be defined. The major attribute of candlesticks is that they illustrate investor sentiment. This means that most of the time a market trend or stock position can be analyzed with the probabilities in our favor.
When the main function that is provided by candlesticks signals cannot be utilized, a trend being identified, then why put your investment funds at risk. The purpose of investing is to exploit the advantages of whatever trading system you are using to take money out of the market. When that system doesn't provide the advantages you are supposed to be receiving, then sit on the sidelines for little bit. Get mentally rested and wait for the signals to tell you what to do.
Although the NASDAQ went through a very sloppy period, the candlestick signals still gave evidence that they were trying to bottom out the market. One May 12th, a huge Hammer formed in both the NASDAQ and the Dow. This would lead us to believe that the bottom had been put in. The stochastics were in the oversold condition and the Hammer was a very nice bottoming signal. However, the buyers did not follow through. Three days later, another very powerful signal formed. The Abandoned Baby, a gap-down Doji, followed by a gap-up the next day was another very strong bottoming signal. The probabilities from that point indicated that we should now be in an uptrend.
As you may have read in the market comments each morning, it was advised to start buying moderately out of the heavy cash position in the portfolios. It was also advised to be very nimble until we saw confirmation to the up side. This past Tuesday clearly illustrated what investors intended to do after this indecision period. The target for both the NASDAQ and the Dow was the 50-day moving average. The NASDAQ has breached that level while the Dow continues toward it. Be prepared to see some resistance the first time the Dow hits the 50-day moving average. This can be verified by viewing the type of candlestick signal that appears when the Dow gets to that level. It is not uncommon for a pullback at the first test of the 50-day moving average.