US Markets closed flat (Dow Jones dipped -0.20%, S&P500 Index shed -0.34% while Nasdaq was down -0.63%); when a security's open and close are virtually equal it formed a 'doji' candlestick pattern. Alone, 'doji' are neutral patterns, any bullish or bearish bias is based on preceding price action and future confirmation. The index was down 5 out of 6 trading days with lower high and lower low (refer to S&P500 Index Chart) hence preceding price action is a downtrend; moreover, yesterday's 'doji' was preceded by a long black candle; this indicate that selling pressure significantly diminished wherefore a potential technical bounce can be expected from the market.
I searched historical patterns that has similar candlestick pattern that we have now (long black candle + doji) to give us some clue as to how the index may (possibly) behave for the next couple of days and i only got two (refer to above chart):
1.) June 2005 --> it was followed by a long white candle (morning star formation), the preceding trends were very similar to that of today: minor uptrend then a pull back (after the morning star formation: long black candle+doji+long white candle) the market resumed its' uptrend.
2.) Sept 2001 --> it was followed by series of black candles; however, the preceding trends were not similar to that of today because the preceding trends were significant downtrends.
I was not satisfied with the above, so i checked on Intel and JNJ Charts since these two companies are next in line to report their earnings and look what i got:
1.) JNJ --> bearish shooting star candlestick pattern.
2.) INTEL --> broke down from minor uptrend that started 1/22/08.
With both the bulls and bears on equal footing it would be prudent to wait for further confirmation, but for those who can take some degree of risk the market is technically near oversold levels.
US DOLLAR INDEX:
The trading range in the US Dollar Index is getting narrower and narrower as it approach the apex of its' symmetrical triangle pattern; it re-tested and respected the support of its' triangle for the second time yesterday and closed slightly above previous day close. A re-test of the resistance of its' triangle is very likely in the coming days.
CRB INDEX:
Light Crude Oil overnight gains lifted the CRB Index after two consecutive days of decline, the commodity market is broadly moving sideways tilted towards downside bias with recent peak serves as resistance and previous high serves as major support.
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