The profitable part of picking hot stocks is getting in early and getting out in time. Although fundamental analysis of stocks can alert traders to the fact that stocks are undervalued it does not necessarily tell one when stock prices will start to move. Picking hot stocks is largely the world of technical analysis and Candlestick stock charts. Those who rely solely on stock tips in picking hot stocks commonly buy stocks too late after prices have risen significantly. The same investors and traders who rely too heavily on tips and neglect Candlestick analysis may overstay their welcome, so to speak, and see their gains fall away in unanticipated market reversal. Certainly one needs to know where to find potentially hot stocks because of if a trader is not analyzing a stock he will not be seeing Candlestick patterns that would help him see a pending stock price or market rally. Services that alert traders to market action are useful in this regard. However, it is still the trader who needs to analyze stocks and decide if he is picking hot stocks or stocks that have now cooled off.
Picking hot stocks does not always mean that the trader will buy low and sell high. Virtually every stock rally levels off or reverses. A trader may not always get into a hot stock early enough to make a profit but he may find that with the use of Candlestick pattern formations that he can predict when the stock will reverse course. At that time selling short can be as profitable as buying at the bottom of a price swing. For the attentive Candlestick trader a useful means of finding hot stocks it to let an expert such as Stephen Bigelow do the work of picking hot stocks. If the trader becomes a member of Candlestick Forum he can watch Steve’s daily stock picks and learn from a Candlestick expert how to analyze, buy, hold, and sell stock using Candlestick trading tactics.
A current hot stock is that of the New York Stock Exchange. The NYSE agreed to a buyout by Deutsche Boerse in February. Now NASDAQ and Intercontinental Exchange are offering nearly twenty percent than the German offer at nearly $12 Billion. A bidding war could drive NYSE stock even higher than the $42 level to which it rose from $35 after the new offer. Variables to consider in this mix are whether the German entity will be allowed to own the largest US stock exchange and whether NASDAQ and NYSE having one owner would be an antitrust violation. The Candlestick trader will read the news and ponder what will happen next just like all the rest. The Candlestick trader will also let Candlestick chart patterns be his guide in buying stock in NYSE, selling stock in NYSE, buying options, or trading NASDAQ instead. Knowing that all trading situations result in patterns and that stock price patterns are predictable the Candlestick trader can follow the progress of a hot stock and get out before it cools off.
Market Direction
Candlestick analysis dramatically improves an investors ability to analyze a trend direction. As illustrated in today’s trading in the Dow, the uptrend remains in progress as long as there was not a candlestick sell signal and a close below the T-line. As can be seen in the Dow chart, there were a number of days that created candlestick sell signal ‘potentials,’ but they were not confirmed the next day with additional selling and the trend showed continued uptrend because of the lack of confirmation of a close below the T-line.
DOW
The NASDAQ and the S&P 500 both form Doji’s today after bouncing back up off the T-line. This makes tomorrow’s trade analysis relatively easy. The markets will move in the direction of how they open after a Doji. The premarket futures should give us an indication whether there has been a change in investor sentiment.
Once you have mastered the easy-to-learn nuances of candlestick signals, you have the capability of finding stock prices that are going to move inordinately strong during market uptrend or downtrends. This information is easily assessed when analyzing candlestick signals at breakout conditions or coming out of candlestick patterns. This is not a difficult process to learn. Human nature reacts the same way time after time with a very high degree of predictability. Candlestick analysis is merely the graphic depiction of what is occurring in investor sentiment. Because investor mentality works the same way time after time, investors can gain huge advantages by graphically witnessing when a price move set up is occurring.
There are numerous candlestick trades setups that make for very high profit positions. Learning a few of these trades setups can provide a very good living. The reason they work with a high degree of accuracy is because they have worked in the past with a high degree of accuracy. That is the exact reason they have been identified.
HRS
HNR
Tonight’s chat session at 8 PM ET – guest speaker David Elliott of WallStreetTeachers – David Elliott and Steve Bigalow have been working together for over the past eight years. David’s expertise in finding and developing short-term technical trading indicators works very effectively in conjunction with candlestick analysis. Join the chat session tonight and view some of the techniques that when applied to candlestick analysis can greatly improve your correct trade ratio.
Chat session at 8 PM ET, everybody is welcome.
Good Investing,
The Candlestick Forum Team
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