The strength of a sector becomes more pronounced during market pullbacks. The past three days has produced profit taking in the Dow and the NASDAQ. The Dow came up through the 50 day moving average and has now pulled back right to that level. This is not an uncommon occurrence. Once a resistance level is breached, prices will usually move back to test that level. If that level holds, in this case the 50 day moving average for the Dow, we know the uptrend will continue if the 50 day moving average act as support.

DOW

During this pullback, the solar energy companies have produced excellent buy signals and maintained their strength even when the market was selling off. This produces more clear evidence that strength has come into that sector. Once again, this may seem like a simplistic analytical view, but there will be sectors that move up when the market moves up and there will be sectors that will show continued strength when they are moving up in spite of the direction of the market.

FSLR

ASTI

When a large percentage of stocks in one sector are moving positive when the market is pulling back, it can be assumed that there is inordinate strength coming into that sector. The candlestick signals allow you to identify where that strength is entering into the markets.

Commodity corner - A major advantage candlestick signals produced for trading commodities is the high probability that they will work a large percentage of the time. It is not difficult to analyze what a price direction should be doing based upon reoccurring signals and patterns that occur in price movements. Will you make profits every day trading commodities? Definitely not! There will be many bad hair days. However, the emotional trauma that occurs after a bad trading day is easily nullified by sticking with what the candlestick signals and patterns repeatedly tell us. After a bad trading day, which will always occur to the best of traders, the signals will still illustrate where the next trades should be. There is an old adage in commodity trading. If you can be correct 55% of the time while trading commodities, you will make a fortune. Fortunately, candlestick analysis provides the trading format that can exceed that 55% correct trade ratio.

Feeder cattle, live cattle, and lean hogs have produced excellent bearish patterns. Using the simple entry and exit strategy programs for trading with candlestick signals, commodity trades can be executed with a high degree of accuracy for producing profits. The same entry and exit strategies and stop loss strategies used for stock trading can be used very effectively for trading commodities. The nature of commodity trading requires stringent disciplines. The information built into candlestick signals provide a trading format that allows an investor to implement successful trading disciplines.

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