March 1st Market Wrap-Up
The hard selloff was a result of the White House talk on tariffs? Could you see that coming? What would be more compelling to show what was happening in investor sentiment was the bearish engulfing signals in the Dow and S&P 500 followed by a close below the T line. Wednesday, the NASDAQ closed lower, right on the T line. Today's weakness illustrated the confirmation of prices trading below the T line. There are some common candlestick truisms when it comes to trend analysis. A candlestick sell signal and a close below the T line produce extremely high probabilities a downtrend is in progress. Was today's announcement about placing tariffs a negative factor? It may not have been as bearish had investor sentiment but still moving in a strong bullish trajectory.
The strength of candlestick signals and patterns are better illustrated when the whole market is selling off and bullish candlestick patterns continue to perform. Candlestick patterns create two major benefits. First, the patterns confirming produce high probability/high profit results. This is illustrated in AAXN the following a strong bullish kicker signal and BSTI following a J-hook pattern confirmation. The second major benefit is that when the markets may be heading in the opposite direction, a candlestick pattern, even if it doesn't continue to perform, will allow for an extra day or two for investors to get out positive or breakeven. A candlestick pattern is created by the accumulative knowledge of everybody buying and selling during a specific time frame. This also includes the decisions that are being made even when investors are witnessing the general market heading in the opposite direction. This allows for producing big profits when candlestick patterns perform and breakeven results when they do not perform.
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The Candlestick Forum Team