Is it decision day for the market? I noted here that one of the buy signals I am looking for will be a candlestick bar in the format of a hammer, inverted hammer, doji or other reversal bar. Yesterday, we saw a doji– but we will need some follow through to see how it plays out. Give it a couple of days to confirm a bottom before jumping in and buying stocks. Note the doji circled on the S&P500 daily chart –created by the mornings rally, followed by some downside then the afternoons almost flat close.
Doji’s can be bearish at market tops. But in this case -its a potential turnaround signal. Doji’s show the market opened and closed pretty tightly – and that can be a sign of change to come. The prior trend was negative – yesterday that trend halted with a moment of indecision. A potential positive hook on the RSI and stochastics indicators are showing further upside potential via the early action on Wednesday. If—and only if- we get a positive follow-through to Friday, I will be start to dip in. Today, as I write, things are positive. So far so good.
Will I invest my entire 50% + cash weighting?
If all works out, and the Tuesday signal confirms to be a “buy” candle, am I jumping in with both feet? Heck no!!!
I am planning to pick away at stocks, assuming the week turns around into a positive confirmation of Tuesday’s candle. I expect to invest in tiers. The initial purchases will be made later this week or early next week, and I will play the peaks and rallies according to the daily chart patterns.
Remember – if the market fails to hold after Tuesdays potentially bullish candle, more evaluation and time will be needed before starting to buy. All in – the next few days should be quite telling!
Keith on BNN
I will be on BNN’s call-in show MarketCall Tonight today – Wednesday September 30th from 6:00pm to 7:00pm. Tune in to BNN to catch me live on BNN’s premier call-in show, where viewers like yourself can ask my technical opinion on the stocks you hold.
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