September 30th Market Direction

After trading positive most of the day, although the Dow finished positive, it closed at or below the T-line. This is a very significant factor. It can be easily visually observed that there is no direction in the overall market trend. The simple T-line rule is basically a probability indicator stating that a trend will remain in a direction if there isn’t a candlestick reversal signal and a close backup above or below the T-line. Currently, the Dow indicates the downtrend remains in progress without a close backup above the T-line. The market sideways mode is still in progress. The character of the market is illustrated by trend movement followed by a sustained sideways trading mode, then followed by a trend and again followed by a sideways trading mode. That is the condition of the markets today. This puts more importance on analyzing each individual stock and sectors. Easy candlestick sectors scans can demonstrate which sectors are acting the most bullish or bearish. This makes for logical scanning of individual stocks in those sectors, as illustrated in the recreational vehicle sector.

What continues to produce good steady profits is the recognition of the strong signals and patterns. Our recommendation on VC was based upon witnessing a belt hold signal that was further confirming a J-hook/frypan bottom trending move. Once you learn the 12 major signals and apply that information to reoccurring candlestick patterns, you put the probabilities dramatically in your favor. Identifying strong patterns produces a dual benefit. The patterns produce sustained profitability even if the overall market trend is sluggish. Additionally, the results of a candlestick pattern is usually much more excessive than merely a trending stock price.

We will conduct a “Members Only” chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team