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November 21st Market Direction

There are numerous pieces of information in the graphics of candlestick analysis. Candlestick signals and patterns not only reveal the direction of a trend, but also the magnitude of strength of a trend. As clearly illustrated in the Dow chart, the strength of the new trend encompassed the trading range of the markets for the prior four months in three days of trading. Today's trading provided valuable information. It created trend kicker signals at the current high resistance levels, demonstrating the trading going into new all-time highs for the market indexes. The trend kicker signals revealed that the strength of the trend was not going to be inhibited at the current high levels. Analyzing what the candlestick charts are showing eliminates the rhetoric of the talking heads. Many were anticipating profit-taking, because the market had not shown any decisive profit-taking since this rally started. This allows the candlestick investor to take advantage of one of the most basic observations provided by the Japanese Rice traders, let the market tell you what the market is doing.

Knowing the direction of the overall market allows for much more refined scanning for which sectors are going to be acting the strongest during the current uptrend. The analysis of crude oil prices produces a very strong prognosis for crude oil stock prices to continue to act strong. The J-hook pattern potential for the ETF's, such as LABU in the biotech area, provides a much higher probability trading strategy for buying the biotech stocks that are also producing very strong J-hook patterns. When an investor comes to the understanding that prices move based upon investor sentiment, and candlestick signals are the graphics depiction of investor sentiment, the probabilities of being in a correct trade at the correct time improves dramatically.


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Good Investing,

The Candlestick Forum Team

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