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December 20th Market Wrap-Up


The current downtrend became very evident from a strong candlestick sell signal, an evening star signal, at a downtrending resistance level and the 50 day moving average. Establishing short positions has been comfortable based upon the downtrend never able to move back up above the T line. It is very interesting to listen to the talking heads on the financial news stations dismissing what technical analysis reveals. Their philosophy is to buy when the market poles back, creating by opportunities. But they never address when would have been a good time to sell. And above that, they scoff at technical analysis that would provide good selling information. There are some very simple visual analytical signals and patterns, along with confirming indicators, that allow the candlestick investor to have their positioning in a portfolio in the correct direction with a high degree of accuracy. Prices do not move based upon extensive fundamental analysis of a stock or a sector, prices move based upon investor sentiment.

Candlestick patterns provide a high probability entry strategies with the simple analysis of knowing which direction the overall market is moving and which individual stock prices are developing strong sell signals/patterns. Knowing the 12 major signals and applying the individual daily signals to a price pattern produces an extremely high probability trend analysis results. Just as the frypan bottom pattern produces huge upside potential when they breakout, the same scenario occurs in a candlestick dumpling top pattern, producing high probabilities of a strong downtrend. PENN add much better probabilities of trading lower in a downtrending market with the development of a dumpling top. Not only do patterns produce price movement that is moving in the correct direction, but patterns usually produce much bigger profitable moves than merely trending stock prices.

There will be no stock chat tonight due to schedule conflict.



Good Investing,

The Candlestick Forum Team



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