December 27th Market Wrap-Up
Although the magnitude of Wednesdays trading was huge, it did not produce a reversal signal. This is not to say there might not be a continued bullish move in the markets but the lack of a reversal signal usually indicates a bounce versus a full-scale new trend. Today's trading revealed profit-taking early in the day but the Bulls reentering the markets going into the end of the day. The T line remains a valuable trend indicator. The week between Christmas and New Year's is normally a low volume, lethargic trading time frame. But obviously this year, that is not occurring. The advantage of utilizing candlestick charts to see what is occurring in investor sentiment is a much more accurate evaluation of what is occurring in the markets versus just relying on what is considered the norm. The lack of a strong candlestick reversal signal in the past two days of trading indicates the probabilities of the bearish sentiment coming to an end but not necessarily indicating a new uptrend is about to start. This might be more of a basing stage in the markets but additional confirmation will be required to indicate the Bulls are taking control. Specific sectors should be analyzed based upon strength being observed in the underlying commodities. Gold and oil stocks should be indicating some strength based upon the strength in gold prices and the possibility that crude oil prices have finally hit bottom.
Another high probability factor that can be evaluated using candlestick charts is being able to identify which sectors are acting the strongest right after the first of the year. This is using the result of fund managers evaluating which sectors they want to be in immediately starting the new year. The strength in those sectors usually carry through for at least a few weeks and/or months. The utilization of candlestick charts will reveal which sectors are being bought with the most energy.
There will be no stock chat tonight due to schedule conflict.
The Candlestick Forum Team
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