Jan,
would you please elaborate
Sure. A good Morning Star is a bottom reversal pattern. It if formed across three days (or periods), one a solid down day, the second a day where the close is close to the open and below the close of the previous day, the third an open above the previous close and a solid gain on the day (possibly close to the open of the first day).
If the pattern is unclear as in this case because the final day wasn't strong with the price falling well back from its highs, there needs to be confirmation which means that the price on the following day should not close below the mid point of the third candle.
All in all, the more I look at this pattern on AMZN, the more I suspect significant weakness. This is partly because it has failed to keep the price above the end of the third day (not fatal but not good) but because yesterdays price action has the suggestion of a harami which would reverse the MS bounce.
What really kills it for me, though is YHOO. This put up a failed Piercing Pattern (9/1)as an attempt at a bounce and followed it with a long-legged doji and another form of doji called a rickshaw man (not quite a perfect one, but close. These are signs of a market loosing its direction (in this case the bounce up) and is classically seen as being signs of a reversal. Put these two together with Russian, Asian, Latin American issues and I suspect that the Internet sector is liable to see further, possibly significant, declines. (XCIT and SEEK are also showing the same signals.)
T |
