This Candlestick Charting is an excerpt from our affiliated partners at the Candlestick Forum.

Where it is the market going? Remember whenthe market was in a steady uptrend a few weeks ago, the projectionswere the market could head dramatically higher, everything was rosey.After the big downdraft three weeks ago, the prognosis changeddramatically. The talking-heads on the financial news stations weregiven us many reasons why the market will head down big-time. Thesubprime lending market could crunch the market! The Chinese economycould be slowing down! The feds could raise rates, lower rates, leaverates unchanged, anything out there could send this market into adownward spiral. In 24 hours, investor’s sentiment changed. The worldeconomy did not change, only investor sentiment. That is whatcandlestick signals measure.

If you put four guest speakers on a financial news talk program, youwill get four different passionate dissertations on which direction themarket is going. Candlestick signals incorporate one very simpleinvestment premise. The Japanese Rice traders profess to "let themarket tell us where the market is going." Everybody can come up withreasons why the market should go up or why the market should go down.However, the candlestick signals reveal immediately what investors are’actually’ doing.

To ignore what the signals are revealing is to ignore theobservations that have produced highly profitable trading profits forover the past 300 to 400 years. Each signal reveals investor sentiment.This past week, the Dow had another hard selling day. The next dayrevealed a Hammer signal. Without the knowledge of what the Hammersignal reveals, an investor would have much less insight into what themarket was doing. A Hammer signal represents the hammering out of thebottom of the market. In the case of the Dow, the signal formed at thesame level that the markets bottomed out previously. This now becomesvaluable information. Despite what all the projections were, such as wewere seeing the beginning of a 10% retracement in the markets, thecandlesticks were providing a different message. The Bulls werestepping back in. Not just an up day, but a candlestick reversal day.

DOW JONES INDUSTRIAL AVERAGE

NASDAQ

The analysis of the market direction and severe reversal signals inindividual stocks provide an extremely high probability of being at theright place at the right time. The quick visual interpretation ofcandlesticks allows an investor to participate in strong profit moves.The combination of candlestick signals with other simple technicalanalytical pattern evaluation provides relatively simple entry and exitstrategies.

You can visit the Candlestick Forum here to access the full website and all they have to offer for the overall Candlestick charting for individual stocks and for the broader index readings.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.