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Strategies & Market Trends : LastShadow's Position Trading -- Ignore unavailable to you. Want to Upgrade?

To: dr.putty who wrote (26902)	12/12/1999 7:30:00 PM
From: LastShadow	Read Replies (2) \| Respond to of 43080

Candlesticks... Well, lots of folks have devoted books to that very question, and there are several websites out there, but I will try for the 25 cent tour here...(although I actually prefer the equivolume charts that varies the width of the candle in proportion to the number of shares sold). Lets take an example like AOL. During the late April reversal (down) we see several Bearish Big Candles that highlight the start of the drop through October. And although there was one rally in late April for a week marked with three Bullish Big Candles, it failed to break the old high and continued on down. If we look at Bullish Hammers for the decline, we see that none of them were in fact foretelling a upturn (therefore Bullish Haramis are not useful for AOL). Bullish Windows, are however, very useful for AOL, as they generally show up early in the uptrend reversal, and in the case of the October through present day rise, showed up 7 times. So the short course is this - like any technical indicator, Candlestick patterns may be useful given that historically a specific stock has a patternable response to a specific signal. Why this happens has to do with volume, the kinds of people that invest in the specific stock, the presence of funds, etc. A Bullish Window on AOL seem to be a good entry sign. A Bullish Harami, while a good entry on another stock, looks pretty useless to AOL. Candles are not a good screnning tool just for that reason. Once you have screened out stocks that are good candidates for other more universal characteristics like On Balance Volume or Bull Power or Relative Strength, then you can explore those stocks with candles to see what, at least in the past, seemed to be indicative of price growth. lastshadow