Stock Reports In The Daily News
On this particular day, a sharp pull-back occurred when a series of poor earnings in stock reports and growing concern about the mortgage market created a drop in stock prices, spearheaded by the Dow Jones Industrials fall of more than 200 points. Unstable markets frequently occur at the end of a quarter as earnings statements are announced and this was the case for such companies as DuPont Co., whose flat second-quarter profit left it as the biggest loser for the day. Earnings season, or the end of a quarter, occurs when companies announce their results and these are times when savvy investors pay close attention to both the stock reports and the news.

In addition to the failings of companies to meet their earnings targets, common stocks can also suffer from economic instability, a fact that frequently appears in stock reports. Continued weakness in the US housing and automotive markets continues to drag on the economy and the concerns that plague the sub prime mortgage market still exist, as evidenced by Countrywide Financial Corp’s profit warning statement. Of the 30 components on the Dow stock reports, the only investment option that didn’t fall this particular day was Verizon Communications Inc, which made only a modest gain.

Analyzing the stock market indexes showed that after a steady climb put the market at record levels, a sell off was likely as investors looked to lock in their gains ahead of the various corporate stock reports. Combined with the economic news, the profit taking created a drop on the Dow has only been exceeded this year by March 13th’s drop of 242 points.

Investment Strategies
The keys to creating an investment strategy during an unstable time are to do your research and act at the right time. Research includes monitoring the stock reports, understanding current events, technical analysis and charting your target companies. By understanding the news and knowing the financial health of your potential acquisitions or liquidations, you are better prepared to make wise decisions.

In addition, timing cannot be overstated. If you have a hot stock but you hold it too long, a bad earnings statement report on the stock could devour your profits. Conversely, if you choose to sell a struggling stock just before it turns the corner you will take a loss when you should be making a gain. Time is of the essence but knowing what to do when the time is right separates investors that make money and those that make it for someone else.

Stock Trading System
Successful trading is the result of putting the correct information into play at the proper time. A large part of that ability is utilizing a trading system like Japanese Candlesticks to chart stocks and analyze trends. The signals contained in Candlesticks helps investors to spot trends and react to potential changes in the market before the stock reports are even announced.

Conclusion
Like a giant mirror, the stock market reflects the events of the day, as well as the stock reports, and reacts accordingly. An investor who is willing to do his or her research and perform Candlestick charting will be more successful at finding the trends and profitably moving on changes in the market.

Market Direction: The Dow pulled back to the support area of early and late June. The support levels, the 20 day moving average and the 50 day moving average did not the contain the selling on Thursday. At one point, the Dow was down over 400 points. This would indicate irrational sell decisions were coming into play. This market reversal clearly illustrates the effects of investor sentiment. Two weeks ago everything was bullish. The economy was strong. The world economy was picking up. US companies were coming out with strong earnings, stronger-than-expected. The economy was viewed as very resilient. Now what are the reasons for the market selling off?

The housing market will devastate the economy! Crude oil prices are trading above $75 per barrel. The major financial institutions may have to finance takeover situations. The same factors that were in existence two weeks ago are now being spun in a whole new manner. Money can be made with very simple analysis of what the candlestick signals are doing in the market indexes and then extrapolating that analysis into individual stocks. That is a very simple process of putting all the probabilities in one's favor.

DOW

JOYG

Commodity trading - The candlestick signals provide a very profitable trading format when trading futures or commodities. Because of the leverage created in commodity contracts, being in the correct direction at the right time is very critical. Along with being able to analyze direction correctly, commodity trading requires much greater execution disciplines. Mr. Bigalow is currently trading a commodity account that can be followed by investors. Over the next few weeks, trading strategies and trading disciplines will be discussed extensively. Commodity trading is usually viewed as high risk investing. However, utilizing candlestick analysis and applying some very simple trading rules makes commodity investing a very lucrative investment format.

There will be a Stock Chat open to the public tonight at 8PM E.T. Click here for instructions.

Good investong,

The Candlestick Forum Team