Candlesticks Early Warning II - The Spectacle of a Public Hanging
The Candlestick price patterns across several major Indexes on March 6, 2009 were "early warnings" of a possible change in trend.
So were the patterns in the NASDAQs on March 9, the next trading day.
On March 10, all markets erupted in a buying spree which has carried the S&P 500 to a high of 875.
The momentum in the Dow Industrials and in the S&P's has steadily fallen off since the takeoff on March 10 to such an extent that we see "rounded tops" there; although the NASDAQs, in particular, remain more vigorous.
All of the major Indexes are heading into a peak, and the NASDAQs are closest of all to peaking.
Now we note another, and current, early warning of an impending reversal (this time to the downside): the Weekly chart of the S&P 500 displays a Candlestick "Hanging Man" pattern.
The "Hanging Man" has bearish connotations, but requires confirmation by a lower close in the next bar.
Actually, this example is close to a "Doji" Hanging Man, in which the opening price and the closing price are the same, or nearly so.
The Dow Industrials Index shows the same "Hanging Man" pattern.
So do the S&P 100, 400, 600, and the Russell 2000.
Actually, one could hardly hope to see a more perfect "Doji Hanging Man" than that which we see in the Weekly chart of the "400:" the open and the close are only twelve-hundredths of a point apart - 550.
20 and 550.
32, respectively.
All by itself, a "Doji" at the top end of a long uptrend, as we see it now, signals "indecision.
" What do we make of all this? We have been given "early warning" signals once again.
At 4:01 PM this coming Friday afternoon, we will be on the lookout for lower weekly closes in these Indexes.
If the closes do come in lower, the "Hanging Man" bearish connotations would then have been confirmed, and we should not be surprised if prices were to decline thereafter.
William Kurtz April 26, 2009
So were the patterns in the NASDAQs on March 9, the next trading day.
On March 10, all markets erupted in a buying spree which has carried the S&P 500 to a high of 875.
The momentum in the Dow Industrials and in the S&P's has steadily fallen off since the takeoff on March 10 to such an extent that we see "rounded tops" there; although the NASDAQs, in particular, remain more vigorous.
All of the major Indexes are heading into a peak, and the NASDAQs are closest of all to peaking.
Now we note another, and current, early warning of an impending reversal (this time to the downside): the Weekly chart of the S&P 500 displays a Candlestick "Hanging Man" pattern.
The "Hanging Man" has bearish connotations, but requires confirmation by a lower close in the next bar.
Actually, this example is close to a "Doji" Hanging Man, in which the opening price and the closing price are the same, or nearly so.
The Dow Industrials Index shows the same "Hanging Man" pattern.
So do the S&P 100, 400, 600, and the Russell 2000.
Actually, one could hardly hope to see a more perfect "Doji Hanging Man" than that which we see in the Weekly chart of the "400:" the open and the close are only twelve-hundredths of a point apart - 550.
20 and 550.
32, respectively.
All by itself, a "Doji" at the top end of a long uptrend, as we see it now, signals "indecision.
" What do we make of all this? We have been given "early warning" signals once again.
At 4:01 PM this coming Friday afternoon, we will be on the lookout for lower weekly closes in these Indexes.
If the closes do come in lower, the "Hanging Man" bearish connotations would then have been confirmed, and we should not be surprised if prices were to decline thereafter.
William Kurtz April 26, 2009
