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August 3rd Market Wrap-Up

The visual formations of candlestick's allows investors to clearly see which direction investor sentiment is moving a trend. Equally important, it also demonstrates when investor sentiment is not moving a market or stock trend in one direction or the other. When analyzing the overall market, this becomes a very strategic relevance for which direction you should be positioning a portfolio or whether to not be exposing money to market risk at all.


Currently, in spite of the Dow consistently hitting new highs, the NASDAQ and S&P 500 is showing the lack of any bullish investor sentiment. The graphics of the candlestick formations in those indexes clearly reveal that more selling pressure is being exhibited versus any buying pressure. However, the selling pressure has not showing any great resiliency, indicating the markets are in a consolidation stage versus a market trend reversal. Whether you want to consider this consolidation or summer doldrums, it does not really matter. What the market indexes are revealing is that there is no major trend force one way or the other.

When the markets do not show any great strength, the magnitude of investor sentiment becomes more evident when analyzing individual stock charts. Currently very strong sell signals in specific sectors are producing better opportunities on the short side than on the long side in these market conditions. The major benefit of candlestick graphics allows investors to identify which direction most of the positions in a portfolio should be oriented. There are some very strong short positions being identified in these market conditions.


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Good Investing,

The Candlestick Forum Team

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