Two Paunches and a Pinch indicate that the S&P 500 is setting up for a corrective bounce.
We do not as yet see a Japanese Candlestick Reversal Warning Pattern in any time frame.
William Kurtz
http://www.CandlesticksOnSteroids.com
May 19, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
|
Two Paunches and a Pinch indicate that the S&P 500 is setting up for a corrective bounce. We do not as yet see a Japanese Candlestick Reversal Warning Pattern in any time frame. William Kurtz http://www.CandlesticksOnSteroids.com May 19, 2012
The Dow Jones Industrials Index peaked on May 1, 2012. The trend reversal occurred over a three-day period, and was characterized by the appearance of an “Evening Star” three-bar reversal warning pattern. The first of the three bars was a white candle, signifying an “Up” day. Prices spiked higher on that day, but then settled back quite substantially off the High of the day, which in itself was a hint that the uptrend was growing old. The second of the three price bars was a “Hanging Man” pattern, in which prices closed slightly lower than the day before. The “Hanging Man” carries bearish connotations, but we look for confirmation of bearishness by a lower Close the next day, which is precisely what occurred. The bearish “Evening Star” pattern was complete at the end of the third day. It appears that the “Evening Star” pattern accurately foretold the 900-point drop in prices from the High of 13338.66 on May 1 to the Low of 12440.60 today. William Kurtz http://www.CandlesticksOnSteroids.com May 17, 2012
“Black Monday” on October 19, 1987 did not “come out of the blue.” or “come out of nowhere,” as some folks who were on the scene still remember it today. Rather, it was the end result of a long, slow process that was weeks in the making. Trend-reversal signals arose on Friday October 2 and again on Monday October 5. Thereafter, traders had nine trading days during an accelerating-declining market within which to exit their positions, had they chosen to do so, before the arrival of Black Monday itself on October 19. No external cause has ever been found for “Black Monday,” because there was none. The “Crash of 1987” and the so-called “Flash Crash of May 6, 2010” are “brothers under the skin.” As in the 1987 case, there were ample, obvious, and powerful Candlestick trend-reversal warning patterns ahead of time, in very late April 2010. On May 6 itself, there was no “flash spike Down” that “came out of the blue” or “came out of nowhere.” Rather, the five-minute chart of the Dow on that day shows a slowly accelerating downward glide over an approximately 150-minute time span, which culminated in a down-spike within a five-minute period.
The Daily chart of the Dow in October 1987 and the 5-minute chart of the Dow on May 6, 2010 are eerily similar. A main difference between the two, of course, is the time compression of the May 2010 example as compared to the October 1987 example. However, the “DNA” of the two events seems nearly the same. The term “Flash Crash” may be catchy nomenclature, but it is a misnomer. As the quoted story noted, no external cause of the “Flash Crash” has ever been identified. As in the 1987 example, it won’t be, because there wasn’t any. William Kurtz http://www.CandlesticksOnSteroids.com May 8, 2012 This does not look healthy. Apple Inc. shares closed Down $3.46 today; and in doing so, price action left behind a classic Japanese Candlestick “Bearish Engulfing” pattern. The “Real Body” of the tall black candle “bearishly engulfed” the “Real Bodies” of the eight price bars which preceded it. This pattern, or one almost exactly the same, also appeared today in Apple charts other than the 60-minute chart which is shown here.
I think that the appearance of this pattern is a powerful warning that the price of Apple shares may have topped. The Japanese Candlestick “Bearish Engulfing” pattern very often leads to price declines in the immediate future after their appearance. Such was the case, for example, when this pattern appeared within a few days prior to the “Flash Crash.” We have seen numerous examples of it during the past several weeks in individual stocks. William Kurtz http://www.CandlesticksOnSteroids.com March 21, 2012apple top Our immediate attention is commanded. On March 16, 2012, two Japanese Candlestick Trend Reversal Warning Patterns which appear to be of major importance appeared in the 30-minute chart of the Dow Industrials. If the implications of these patterns are borne out in the passage of time, the stock market will suffer a disastrous loss even greater than that which was inflicted on investor portfolios during the major selloff which occurred between October 2007 and early March 2009. After a very long price advance – even going back to the start of the Great Rally in March 2009 – and many “false tops” along the way – the price of the Dow spiked on Opening yesterday to a High of 13288.33 within the first 30 minutes of trading; and then, at the expiration of that 30-minute time span, the price had fallen back to the same price at which trading had opened. The result of this price action was a “high-Wave Doji.” The main distinguishing characteristic of the Doji is that the Opening price and the Closing price are the same, or very nearly so. The Doji has bearish implications when it appears at the top of a sustained uptrend, as was the case in this instance.
In Japanese Candlestick terminology, the “Real Body” is that portion of the total price bar which represents the price distance between the Open and the Close. Obviously, if the Open and the Close are the same, the “Real Body” in that case will be represented by a horizontal line. This particular example of a Doji is special, for two reasons: One, the great height of the “shadow” above the Real Body (a “spike High,” suggesting a “final blowoff”); and Two, the Open and the Close are not merely “nearly the same,” they are identical. This is a rare occurrence. Further, on the same day there appeared a Japanese Candlestick “Bearish Engulfing” pattern, in which the Real Body of a tall black candle completely subsumed, or engulfed, the Real Bodies of the seven price bars which preceded it. I think that the concatenation of these two bearish reversal warning patterns on the same day, in the context in which they arose, is an especially potent warning of a reversal of trend. If the implications of these patterns were to be borne out in the passage of time, the stock market will suffer a momentous decline. William Kurtz http://www.CandlesticksOnSteroids.com March 17, 2012 What is arguably a Japanese Candlestick “Inverted Hammer” Reversal Pattern developed in the Daily chart of TLT shares today, at the bottom of a downtrend. The more compelling argument for a Reversal is found in the Indicators. TLT shares are a fairly good proxy for Treasury Bonds. Most often, the direction of price action in TLT shares is approximately the inverse of the direction of price action in the blue chip Indexes. The attached chart displays some of the Indicators which are used in the “Candelaabra” technical analysis system, which concentrates on identifying reversals of trend as they are occurring and even before they have fully formed. Candelaabra identifies extremes in the various Indicator readings and the relationships of those extremes to each other, in particular sets which are comprised of two Indicators per set. The Candlestick and Indicator patterns that we see today suggest that TLT is setting up for a reversal to the upside, and inferentially for a reversal to the downside in the blue chip Indexes.
This is the key to understanding the implications of the Indicator readings as set up in accordance with the Candelaabra System: (a) The price of TLT is very low; (b) There is a wide gap, or “Blimp,” between Indicator “ADX” and Indicator “Stoch K;” (c) Indicator “Bollinger Percent B” is very low, having just turned up today from near the bottom of its range; (d) There is a “Crimp” between Indicator “Bollinger Percent B” and Indicator “Chandelle 1;” and (e) there is a wide gap, or “Blimp,” between Indicators “Chandelle 1” and “Chandelle 2.” These sets of Indicators – each set being composed of two Indicators – are involved a “love-hate” relationship. When the two of them are far apart, they yearn to be closer to each other; and when they are close to each other, they want to move apart. This particular setup as shown in the chart of TLT shows the extreme readings of the various Indicators and the relationships of those extreme readings as between the various sets. This setup infers a very high probability that the price of TLT shares will soon reverse upward, and that the prices of the blue chip Indexes will soon reverse downward. Japanese Candlestick Reversal Patterns, in combination with certain Indicators when they are arranged in “Candelaabra fashion,” as shown on the chart, comprise a potent tool for predicting changes of trend in financial instruments. William Kurtz http://www.CandlesticksOnSteroids.com March 15, 2012 The manic rise in the price of Silver in late April 2011 led to a swift decline and a loss of nearly 34%. There seems to be a correlation now between that experience in Silver a year ago and the situation in Apple shares now. We see a similar mania at work, and a Japanese Candlestick “Bearish Engulfing” pattern in Apple shares.
Manias always come to end, viz. the “South Seas Bubble” and the “Tulip Bulb Craze;” and when they do end, prices are usually below those which were in effect before the mania began.
I fear that the current mania in Apple shares will soon implode; and that when it is all over, the price of those shares is likely to be at $425 or lower.
The Japanese Candlestick “Bearish Engulfing” pattern in Apple shares is a warning that the price rise in those shares may rapidly be coming to an end. William Kurtz http://www.CandlesticksOnSteroids.com March 15, 2012 Today we see a doubly bearish Japanese Candlestick Reversal Warning Pattern in the Dow Industrials: a Doji buried within a Bearish Engulfing Pattern. The “Doji” is characterized by the condition in which the Opening price and the Closing price are the same, or very nearly so. In the subject example, the Opening price was 12970.76, while the Closing price was 12970.91. That’s close enough to qualify as a Doji. The Doji signifies “indecision;” so when it appears at the top of an extended price rise, we respect it as a bearish warning signal.
This particular Japanese Candlestick Reversal Warning pattern also was a “Bearish Engulfing” pattern, in that the “Real Body” of the tall black candle completely engulfed the “Real Bodies” of the three price bars which preceded it. We have observed the appearance of this pattern many times in recent weeks, which should not be surprising, because two powerful uptrends working in unison – one from October 4, 2011 and the other from March 2009 – are rapidly coming to the point of peak and reversal, if indeed they have not already done so. William Kurtz http://www.CandlesticksOnSteroids.com March 12, 2012 Apple Top and Reversal? A Japanese Candlestick Reversal Warning Pattern has arisen in shares of Apple Inc. Such patterns as these are warnings, not guarantees; but when they arise at the top of a long price advance, we sit up and take notice. In this example (the top chart), the Real Body of the tall black Candle completely engulfed the Real Bodies of the four price bars which preceded it. We do not yet see that prices have reversed to the downside; so the effect of the bearish pattern may be delayed – or the pattern may not “work” at all. But the warning is there.
The second chart displays a concatenation of bearish circumstances, too. We see that prices are high, and that they have continued to rise while the Bollinger Percent B indicator has begun to tail off, and the Chandelle 2 indicator has begun to tail off dramatically from a “Pinch” or “Kiss” configuration, while at the same time there is a “Pinch” between the ADX and the StochK indicators and the Bollinger Percent B indicator is high. These conditions are bearish in the aggregate.
Japanese Candlestick Reversal Warning Patterns, in combination with extreme Indicator readings which at the same time reveal disparities, are a valuable tool in assessing the probability of the course of future price action in financial instruments. William Kurtz http://www.CandlesticksOnSteroids.com March 8, 2012 |
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Copyright © 2012 CandleWaveBlog.com - All Rights Reserved |
|||||||||||||||||||||||||||||||||||||||||||||||||||
