Archives for August 2019

Stock price analysis lies at the root of profitable stock trading. Stock traders profit from buying stock, selling stock, trading stock options, and trading futures on stocks. Traders profit from the price difference between entering a stock position and exiting. Thus stock price analysis is essential. Long term investing relies upon an analysis of the margin of safety of a stock and intrinsic stock value. However, buying a promising stock that has already run up in stock price can greatly diminish profits. Thus stock price analysis can be as important for the long term investor as it is for the day trader. Both long term investors and traders can profit from the use of Candlestick analysis. This easy to read technical analysis tool allows traders to execute trades with a high statistical probability of success without falling prey to the twin stock market trading demons of fear and greed.

Stock price analysis can be carried out with the long view in mind and with an eye towards minute by minute day trading profits. A conservative investor may wish to have a couple of dividend stocks in his stock portfolio. Using stock price analysis he will often buy these stocks when interest rates are high because the stock prices of dividend stocks will commonly be low at these times. When interest rates fall the investor will have the choice of continuing to receive dividends or selling the dividend stock at the now-higher stock price. On the other hand the day trader will commonly use Candlestick stock charts in order to anticipate short and medium term stock price fluctuations. Although the long term investor will commonly prefer a very stable and predictable stock the trader will commonly look for stock volatility and market volatility which picking stocks in search of short term trading profits.

It is common for successful investors to use technical analysis tools such as Candlestick patterns in choose if and when to purchase a stock. The long term investor will look for stocks with strong forward looking earnings potential as well as the margin of safety that cash in the bank and unencumbered physical assets represent. However, such stocks are often highly priced as investors are willing to pay for the promise and security that the stock offers. Thus an astute investor will often pass on such otherwise promising stock after seeing its high price to earnings ratio or high price to sales ratio. Here is where tools such as Candlestick pattern formations come to the aid of the long term investor. Even very stable and successful companies see their stock prices fluctuate during stock market crashes, rumors of mergers and acquisitions, or news of a new product coming out from a competitor. By using Candlestick signals for stock price analysis the long term investor will commonly be able to gain market insight during times of high price volatility and successfully purchase the stock in question on a short term correction. Whether one is interested in long term investing or trading for short term profits, stock price analysis with Japanese Candlesticks gives one a high statistical probability of success without the confusion and mistakes that the psychology of trading can bring about.

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Market Direction

Has the downtrend reversed? Has the candlestick signals revealed reversal signals? Although the markets are still in a slow down trend, there have been candlestick reversal signals being formed at these levels. That is providing valuable information. It is visually revealing that buyers are starting to step in at these levels. There are very simple strategies that allow investors to be positioned correctly if a transition in the market trend is starting to take place. 

Private training sessions – August 2011 – It is often asked what are the benefits of attending a private training session. There is a definite benefit to learning candlestick signals and patterns and the related factors surrounding candlesticks that produce consistent profits. These private training sessions, consisting of three or four traders being instructed by Stephen W Bigalow allow for very concise demonstrations and answers to one’s personal questions. Have you ever gone through a training session where your questions were quite answered to where you fully understood? And then the remaining portion of the training session was a little bit hazy because you weren’t fully understanding a specific aspect? A private training session consists of two solid days of viewing and understanding how candlestick analysis works effectively. You will not be provided with information that you have to figure out how to use correctly. You will be instructed in how to use candlestick signals correctly. You do not believe the training with any un-answered questions in your mind.

When you see how candlestick analysis is derived from common sense investment practices, your concept on how to invest correctly is completely altered. You will understand how to buy at the bottoms when everybody else is selling and selling at the tops when everybody else is buying. You will learn how to scan for the high probability/high profit trades. You will learn how to automatically set your stop loss procedures without having any emotional attachment. The learning process is not a “drum into your head” memorization process. Stephen Bigalow shows you how to interpret high profit trading patterns as a natural visual perspective. What makes it even better is the learning environment. The teaching process is done on a porch reviewing charts while also enjoying the clear waters of Keuka Lake, a beautiful Finger Lake of New York State. Breaks do not consist of getting a drink at the water fountain in the hallway of a stark hotel. Breaks at these training sessions consist of taking a dip in the cool and refreshing waters of the lake. The learning process does not end away from the computer screens. Investors can continue to ask questions and get answers from Mr. Bigalow at some of the best wineries in the nation or at dinner in a historic hotel restaurant overlooking the lake.

When you finish a candlestick training session, you will have gained a completely different perspective on what makes consistent profits in the markets. You become a controller of your investments versus the markets controlling you. Do not miss this opportunity to gain valuable insights into the most proven investment program in the world. The nuances of 400 years of candlestick observations, when conveyed to you in very pleasant surroundings, allows you to go home and make consistent returns. These training sessions are an excellent getaway for bringing your spouse and having them enjoy the attractions of the New York’s Finger Lakes region. Seats are obviously very limited. We will have this item posted in our site on Friday.

Chat session tonight at 8 PM ET. Everyone Is Welcome.

Good Investing,

The Candlestick Forum Team

Traders can spend too much time scanning for trades. It almost sounds paradoxical; an investor needs good trades to be profitable, but spending hours in vain searching for the “needle in the haystack” typically produces nothing but another bad trade. It is actually quite easy to pick stocks. Who hasn’t looked back and said something like, “I knew to buy Microsoft when it was $2.00 a share.”? The pick is easy; for most, taking a position is the hardest part. While it is easy to sit back and hope for stock market tips, a proactive investor will combine a stock trading plan with a proven stock trading software to form a channel for locating and buying good stocks.

A stock trading system is fundamental to every trade and something that the investor establishes prior to moving in the stock market. A stock trading system, such as candlestick analysis stock market investing is the method of interpreting movements in the stock market. Scanning for trades using stock scanning software is the final critical piece needed to help the investor to make his or her own trading tips.

There are many software programs available for scanning for trades. It is important to find one that offers the desired features and results without excessive processing time or confusing programming requirements. Simple online searches or the best investment advice from satisfied friends can be the most successful ways to locate a software package. The important thing to remember with any stock market investing software is that the purpose isn’t to locate the perfect trade. Scanning for trades with software only provides the data needed to perform stock technical analysis. This will allow the investor to use his or her stock investing system to provide the tips needed to make a trade. The best trading tip available is for the investor to use his or her own eyes. A good formula is to use while scanning for trades is to identify a crude group of prospects, then for the trader to review the list for prospects. After this is complete, an analysis of the chart formations becomes much easier to complete since the data is inclusive.
An excellent trading tip is to make the stock scanning software become part of the process for identifying potential trades, not the final authority. When using candlestick trading tactics, a trader can then evaluate the candlestick chart formations and determine a course of action. Chart formations indicate the direction a stock is moving and any unusual directions it might encounter in the process.

The “needle in the haystack” is the thing that every investor wants to find. With a stock trading plan, a stock investing system and stock trading software, scanning for trades becomes easier than ever to find that needle. The three pieces needed to identify successful trades are in place. And when the opportunity rolls around next time, the investor can stand up proudly at the Rolls Royce dealership and proclaim, ?I knew to buy stock in ABC Corp when it was only $1.00 per share!? right before driving away in that $125,000 Rolls he earned by scanning for trades the right way and putting in the effort to give himself a winning edge.

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Market Direction

Candlestick signals provide a much clearer picture of what the overall market trend will be doing. The candlestick formations provide an immense amount of information. That information becomes very easy to analyze because of its visual nature. This past week, the markets showed a strong possibility that the sellers could be taking control. The big down day in both the Dow and the NASDAQ was confirmation. Was this a full scale reversal or was it profit taking? Analyzing the candle formations at important technical levels make trend analysis very easy to comprehend.

After the severe pullback in the markets, which could have led to more downside, the markets supported in an important level, the 20 day moving average. Why was this an important level? Because the uptrend of the past few months has been supporting on the 20 day moving average. The Morning Star signal over the past three days of trading in the Dow, right at the 20 day moving average, was a good indication that the Bulls were still participating in this trend.

Dow

The small bullish candle in the NASDAQ, right on the 20 day moving average, provided easy analytical criteria for how the trend should continue. With the stochastics heading in a downward direction, the small bullish candle in the NASDAQ on Wednesday would have been considered merely a bounce after a big down day had prices continued lower the following day. The lack of support at the 20 day moving average would have simply revealed that the 20 day moving average was not acting as a support level anymore.

NASDAQ

The fact that there was a gap up following a bullish candle the next day produced significant information. The buyers were stepping back in with enthusiasm. This provided reasonably good information that the sellers had not yet taken control of the trend. This is not sophisticated analysis. This is merely interpreting what the candlestick signals are telling us. If the Bulls were stepping in again, maintaining the uptrend, that should provide a good number of trade opportunities.

There are thousands of stock trade opportunities. How does an investor analyze which trades are going to have the best potential and how can that be done in a reasonable amount of time? Candlestick signals are very beneficial for cultivating down to the best possible trades. Knowing what is incorporated into each signal provides scanning formulas that make finding the strongest trades very easy.

The application of common sense scanning criteria provided by candlestick analysis creates a very simple trade process. What criteria can be added to the scanning analysis that continually puts the probabilities in the investors favor? What direction is the overall trend of the market? That can be easily analyzed using candlestick signals. What direction is a specific sector moving? That can also be easily analyzed using candlestick signals. What chart patterns or signals produce the highest potential of a strong price move? When all these criteria are put into simple scanning processes, a small number of high potential trades can be identified in a matter of a few minutes each day.
Will the scanning results put you into big profit trades? Not necessarily, but what the results from a candlestick scanning technique does provide is trade setups that have the potential for being big profit trades. The Dynavax Tech chart illustrates the simple logic involved with being able to identify candlestick reversal signals and applying that information with other technical parameters.

DVAX

The Hammer type signal forming right on the 50 day moving average, a major potential support level, with stochastics in the oversold condition, followed by a gap up in price, makes for an extremely high potential/high profit trade situation. This position was recommended in our Candlestick Forum members’ area based upon the identification of a strong buy signal. Again, will the scanning results put you into big profit trades? The scanning results produce situations for participating in  high potential trades.

Understanding the psychology in  price trends becomes very important for participating in big profit trades. That psychology can be better interpreted when identifying and evaluating what the individual candlestick formations represent. Being able to evaluate what ‘might’ be occurring during a price trend, based upon the previous candle formations, such as inordinate strength, has a different potential result than a previous moderate uptrend. Learning how to properly use candlestick analysis is very easy. It is the common sense evaluation of what has occurred in investor sentiment during a price move millions of times in the past.

NEW RELEASE – Scanning Techniques to Higher Profits is now available on the website. This training CD provides an easy step-by-step process for creating effective scanning techniques. Additionally, the analytical process is incorporated into the evaluation of the highest potential trades for the next trading day. This powerful combination allows an investor to be participating in the potential big profit moves.

Click here to receive the Introductory Price Special on – Scanning Techniques to Higher Profits 

Chat session tonight open to everybody 8 p.m. ET – Stock Chat Instructions Here

Good investing,
The Candlestick Forum Staff

Candlestick charting techniques have been around for over 100 years and began in Japan. Homma, a Japanese man discovered that the difference between the value and the price of rice was greatly influenced by the emotions of the rice traders. The principles that he established for rice trading are applicable to stocks as they are currently traded today. This formed the basis for candlestick chart analysis which is used to measure the market’s emotions towards stock. The idea behind candlestick charting is to take advantage of forecasted price direction change for any selected time period.

Japanese candlestick charts were developed before the bar chart and the point-and-figure stock charts were is use and they are still the preferable chart for most traders. Candlestick charts are considered to be more visually appealing and therefore are easier to read. These charts are also flexible because they can be used alone or in combination with other technical analysis tools. This provides a significant advantage for candlestick charting techniques over other trading techniques, and it provides an extra element of analysis.

To a technical stock trader, the importance of candlestick trading is that it explains the relationship between the opening and closing stock prices. This is the most important part of candlestick analysis. When the opening price is above the closing price the candlestick chart is typically referred to as the black candlestick and conversely when the opening price is lower than the closing price, a white candlestick will form. This is pretty easily distinguishable when looking at the candlestick chart.

There are two patterns that are pretty much the most basic candlestick patterns that are used in candlestick charting techniques, and they are called the doji candlestick and the bullish engulfing.

This doji candlestick is formed when the opening stock price and closing price are the same or very close. What this means in the market is that the bulls and the bears are conflicted and the investors must take action. The action the investor must take however depends on where it occurs in the trend. If it occurs at the bottom of an extended downtrend, the investor must look for buying signals to confirm the reversal. Conversely, when the doji appears at the top of a trend, in an overbought area, this indicates to the investor that he or she should sell immediately.
The engulfing candlestick pattern is a major reversal pattern made of two bodies that are opposite colors. The bullish engulfing pattern forms after a downtrend and it opens lower than the previous day’s close and it closes higher than the previous day’s open. As a result, the white (hollow) candle completely engulfs the previous day’s black candle. A white (hollow) candle is representative of a day when the close was higher than the previous day’s open, and the black candle represents a day when the close for the day was lower than the previous day’s close. 
There is a lot more to understanding candlestick charting techniques. Traders should learn first about the 12 major signals, and then they can move onto learning about the secondary candlestick patterns that are used in Japanese candlestick charting.

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Market Direction

Knowing what each individual signal looks like allows for perfect timing when a reversal could potentially occur. This was illustrated in the Dow chart as well as the NASDAQ chart today. What constitutes the definition of where a reversal could potentially occur? At any level that can be conceived by many investors as a support or resistance level. Yesterday the NASDAQ closed right on the recent lows. The Dow chart was approaching that same area. Stochastics were not quite to the oversold level, but they were getting relatively close. With the setup of these indicators, two assumptions could be made. The current lows could act as a support level or if the current lows were breached with a strong bearish candle today, wave three was then in progress.

NASDAQ

The early-morning trading started the markets off in a negative direction. The Dow was down at least a couple hundred points in the morning. The NASDAQ was trading in new low territory. The Dow was showing considerable weakness. An aggressive trader, knowing there was the possibility of supporting at the recent previous lows, can be prepared for a potential candlestick signal. Around midday, buying started to show up. At that point, aggressive traders or daytraders should switch their concentration onto shorter-term charts, the 10 minute chart, a 30 minute chart, or the hourly chart. As the afternoon progressed, it was obvious that at least a Hammer signal was forming. That potential reversal signal is a new evaluation on the plate. Going into the latter part of the day, with a reversal signal forming, would have made it more obvious that these levels were acting as support. This should have instigated the covering of short positions.

What has the market been previously telling us? In the current downtrend, any late afternoon buying was followed by more selling. As Thursday  afternoon progressed, it became obvious that no selling pressure was coming back into the market. This made projecting the candle formation fairly easy. It was going to be at worst a long-legged Doji. Probably a Hammer signal. Better yet, a Hammer/Harami signal. It finally closed as a booster Bullish Engulfing signal. This is a very strong signal bouncing off an obvious support level.

The question often arises, when is it time to cover short positions, or long positions for that matter. The best answer is when you can easily assess that there has been a change of investor sentiment at an obvious support level. If individual position can be seen to be setting up to form a potential reversal signal, closeout the positions. This could be seen in our recommendation today in the TUP chart. It was just about ready to break down through recent low areas. Had it closed near the low end of the trading range today, it would have been a set up for a bearish Jayhook pattern. However, with the price coming back up near the  top end of the trading range of the day, it was potentially forming a Hammer signal, near the recent lows. Knowing what type of signals a price-move might be forming allows for much quicker decisions for when to get out of positions and be ready to establish positions in the opposite direction.

TUP

This is not difficult or involved technical analysis. This is taking the information that is built into each candlestick signal and applying it for the appropriate times to be getting in and out of trades. The visual aspects of candlestick signals allows for that extra anticipation of what type of signal could be forming. Take advantage of the visual aspects of these valuable trading tools. Using them correctly will definitely increase your profitability and reduce the emotional decision-making.

Good investing,
The Candlestick Forum Team

Don’t miss out on Free Stock Market Newsletters and trading with Japanese Candlesticks by Stephen W. Bigalow, author of Profitable Candlestick Trading and High Profit Candlestick Patterns.

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Market Comments

The publication utilizes the capabilities of the Candlestick signals to quickly analyze all investment vehicles. Stephen W. Bigalow’s years of Candlestick analysis experience produces an easy to read, concise evaluation of market direction. Accurate evaluations are assessed to the Dow, the NASDAQ, S&P, bonds, metals, currencies, and all market entities that allow an investor to project future price movements. Having this knowledge presented in a clear format allows the investor to formulate concise decisions.

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Stay up to date with the latest Stock Market Exchange Holidays, which often cause lower trading volume around the dates the market closes for recognized stock market holidays. Follow how situations in the news media can affect your profits, profits created by media reports causing panic selling and exuberant buying provide excellent profit taking opportunities. Stay apprised of government and business decisions.

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Ready to begin your Japanese Candlestick Education? May we suggest beginning with 
Understanding Candlestick Charts and Candlestick Images & Explanations 

Stock investing for beginners can be overwhelming in the beginning. The huge amounts of information available on the Internet make trying to cultivate the right information very difficult.

Stock investing for beginners requires a focused plan. Correctly learning candlestick signals greatly simplifies the learning process. Not only do the signals illustrate when a change of investor sentiment has occurred, learning what was the investor sentiment that created the signal is an important educational tool.

Stock investing for beginners usually involves finding the stocks that are going up. Unfortunately, most investors do not research why those positions should be going up. Chasing after the rumors or the hot stock stories is usually the wrong stock-investing process. But it seems to be the most enticing. However, it does not create a platform for when and why the next position should be moving. The candlestick signals provide an immense amount of information. A candlestick signal is formed by specific dynamics of investor perspective.

Candlestick analysis is based upon  reoccurring thought processes from inexperienced investors all the way through to the seasoned traders.  The signals are the cumulative knowledge of everybody buying and selling during a specific time- period. Having the ability to quickly recognize what is occurring in investor sentiment creates huge advantages.  Stock investing for beginners should not be made difficult.  It should be an easy learning process.  The Candlestick Forum is a very strong advocate of teaching kids how to invest and we welcome them to all our stock market training seminars.  Teach your kids how to invest during their learning years.  Once they get to the age to where they ‘need’ to be investing, they will not be making the common mistakes most of us make when getting our feet wet in the markets. They will now be learning to improve their investment techniques.

The 12 major candlestick signals incorporate common sense investment techniques.  Simplify the process. Learn these 12 major signals and the reasons for market direction changes can be easily understood. Click here to review the 12 major CD special.