Market Projections Are Worthless!

The start of a new year and everybody is getting ready to make their investment decisions for the year ahead. Professional market analysts make their projections for what the market is going to do over the next 12 months. Exactly what are the benefits of these projections? Nothing! They are useless! Not only are they useless but they are a detriment. Nobody knows where the market is going to be in one year from now. How is anybody going to accurately project what investor sentiment is going to do over the next 12 months? Will there be assassinations this year? Will there be an attack on US soil? Will there be natural disasters, epidemics, global cooling? Nobody can foresee the future.

Assessing what the market indexes might do over the next 12 months "might" have a basis based upon current economic conditions. What will earnings reflect during the coming year? Under current economic conditions, one might assume that earnings will continue to grow. That is if current market conditions remain constant.

Will the European banking system problems be resolved? Will Iran back down from making nuclear weapons? Will China's economy continue to be sluggish or will it pick up strength. Anyone of these conditions could greatly alter investor outlook during the coming year. It is dangerous as an investor to become fixated upon a 12-month outlook from even the most respected market investors.

Too often, investors use a beginning of the year projection is to establish their trading strategy for the next 12 months. This can be a costly mistake. It becomes difficult to alter portfolio positioning when one has set their mind to obtaining the projected targets.

Candlestick analysis greatly relieves the risk of incorrect market positioning. Today's market trends may have characteristics unlike those of a couple decades ago. This is due to direct access to investment information for all investors, without waiting for disseminated information through brokerage firms.

When the entire investment community can now be making investment decisions immediately based upon fresh information, the price movements of stocks or any trading entity will be completely different from what it was 20 years ago. Many centuries ago, Japanese Rice traders utilized one very simple premise, "Let the market tell you what the market is doing." This process can be used for multiple time frames. The Dow ended the year supporting above the T line (the eight exponential moving average) and an obvious resistance level formed over the past two months.

DOW short term

This makes the assessment easy for projecting what the markets will do for the month of January. A positive trading day on Tuesday would indicate the Bulls are still in control of the market. A breakout through the resistance level could start another strong leg of an uptrend. A weaker open would indicate the resistance level was maintaining control. A pullback to the 50-day moving average would be likely but the bigger picture would be that the extensive analysis by major money managers around the world were more inclined to be bearish going into 2012.

DOW long term

A weaker open, especially during the first five trading days, might indicate more sideways movement in the markets as illustrated beginning in March of last year. Candlestick signals and patterns provide high probability analysis of short-term price movements. This information can also be extrapolated into longer-term price trends. Using candlestick signals and patterns for evaluating price trends dramatically reduces the guesswork. Because each signal and pattern has recognizable investor sentiment built into it, the candlestick investor has a great advantage.

Evaluation of investor sentiment is easier to evaluate, with a high degree of accuracy, and continuation of current price trends until a candlestick reversal signal demonstrates a change of investor sentiment.

Most investors want to hold positions for a least a year; from a practice induced tax codes created by government officials. Unfortunately, a one-year timeframe has absolutely nothing to do with price movements. Because of the greater accessibility to current information, sector trends may only last for three months or six months. There are different influences on stock price movement today than there was 20 years ago.

In the past, technology could push one company ahead of another when competing in their market. Today, technology is advancing so rapidly, the leadership of a sector can change very quickly or a whole sector can become obsolete based upon new technology.

Utilize candlestick analysis for determining where and when buying and selling is coming into the markets/sectors. Portfolio returns improve dramatically when listening to candlestick signals that have worked effectively for centuries. Candlestick analysis greatly improves the probabilities of be any in the right positions at the right time.

Stephen W. Bigalow is author of “Profitable Candlestick Investing, Pinpointing Market Turns to Maximize Profits”, “High Profit Candlestick Patterns” and “Candlestick Profits, Eliminating  Emotions” is also principal of the www.candlestickforum.com <http://www.candlestickforum.com>, the leading website on the Internet for providing information and educational material about Japanese Candlestick investing.  Over 28 years of extensive study and utilization of candlestick analysis has produced an array of easy-to-learn educational material about Candlesticks. As one of the leading Candlestick experts in the nation, Mr. Bigalow, through consulting with major trading firms, has developed multiple successful trading programs from the day-trader to the long-term hold investor