Papya; RE:" indecision "
>as for a "spinning top" call...
...I think his inference is that the indecision at the resistance level(1105ish) is reflected in the candle patterns. There are many types of candles that reflect indecision. personally, I think that is what candles are best for, showing the "emotion" of the market. It is a mistake to use candles without also taking many other TA methods into consideration...
Well said. I remember what Esteban once said to me, when we were both just starting to apply candlesticks to indices: "Index Candlesticks show mass psychology in pictures".
Revealing sentiment without measuring extent is how I think of candlesticks today.
Both Nison and Morris discuss how we, in the West, tend to over-engineer our candlestick expectations; ie., there are patterns, certainly - but sentiment is emotion - so don't be too strict. It's not like P&F Charting or Edwards & Magee Dow Theory.
Rogers' chart is the OEX.X index. Looking at some other indices (as I am sure he does), the XMI.X - Major Market Index, which is more broadly based than the DJIA-30 or OEX-100, Wednesday's candlestick is clearly a doji after long white candlestick. Whatever - "indecision" was the obvious sentiment, regardless of the label on the 'stick.
Morris also does a good job of showing how 2 or more candlesticks form a (simpler) indicator of sentiment when they are summed together. A piercing candlestick, when summed with its predecessor, for example, forms a hammer or a shooting star result.
>it is always good to compare weekly, daily, hourly charts...
Also damn good advice, Papya. Esteban and I did a lot of work with various intra-day time slices, which - in effect - is akin to summing up smaller candles to show some overall sentiment. We found that this works very well, indeed - but we also discovered that the optimum size of the time-slice sum is not constant -- sometimes you have to sum up a lot of candlesticks, sometimes you have to break them apart into smaller time slices. Apparently, sentiment is not time-constant, and has something to do with the "speed" of the market index or equity (not volatility or volume -- velocity).
To date, I have had better results applying Candlesticks to position trading; ie., determining reversals of sentiment - rather than momentum trading (continuation patterns), which are probably better served by P&F techniques. The other Japanese techniques, Renko, Kagi, and Three-Line Break Charts are, in essence, P&F charts 'Japanese Style' - and I think their traders rely on them more for determining momentum and extent.
>my basic thought was and is that until resistance at 1105ish on the S&P is broken strongly to the upside on a closing basis then the trend will continue down...
If we connect the bottoms of the OEX,d chart - the DownTrend has been in effect since April. The DownTrend from July is a different animal, don't you think ? What we don't know, is whether the OEX will bounce along the mildly-sloping April DownTrend in little sine-waves, or whether that mother-f* July DownTrend will become dominant, pushing us down sharply another -9%, with few, if any rallies over +3% from any oversold condition.
But, as I mentioned to Donald, consider this, Papya: If we go down again, to where we began the week - summing up the daily 'sticks would create one heluva big inverted hammer or, even the classic gravestone doji for this week's candlestick. The Japanese believe that the only "true" gravestone doji occurs at the end of a relentless DownTrend, putting it to rest, so to speak, forever.
Rest in Peace, bitch - We're down -9%, and indecisive. (^_^)
-Steve |
