Candlestick Dilemma:

I am a big believer in candlesticks, but they do not compare to pure PRICE action. I am often asked what is my favorite indicator, and I always say PRICE. Because essentially every indicator reacts to PRICE, so why not just follow that alone. That being said candlesticks can help one shave or add to core positions, and I have found in my experience that they work better near bottoms than at tops, perhaps because simply markets have a longer-term bullish bias obviously. Now some of the generals are starting to be taken out back and shot, and they have witnessed several bearish candlesticks recently. In a feeling of the more things change the more they stay the same, we mentioned software has been weak in our last Technology Note, and they continue to lag to start 2022, just like they did in the latter half of 2021. Tuesday the IGV lost more than 2%, but some of the leading semi plays are now feeling the heat. Names like NVDA have a big significance on the group and it has been making lower highs since a bearish engulfing candle at all-time highs on 11/22 and is now 15% off that peak. Below is the chart of AAPL and this was celebrated this week as joining the “exclusive” $3T market cap. Milestones like that tend to cause short-term tops.

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