GE's Candlestick Fingerprint Foretold the Rally First
Saturday, May 2, 2009 | William Kurtz Is this Spam?On Friday, March 6, 2009, the Dow Industrials Index left in its wake a “High-Wave Spinning Top” Candlestick bar after a long downtrend, the fact of which we broadcast the same evening as a warning of a possible trend reversal. On the same day, the S&P 500 and 100 formed “High-Wave Doji” patterns which, if anything, are even more cogent warnings of trend reversal. (A “Doji” occurs when the opening price and the closing price are the same, or nearly so. On that day, the opening and the closing in the S&P 100 were only nine hundredths of a point apart).
On the following Monday, March 9, the NASDAQ Composite and the NASDAQ 100 bolstered those Dow and S&P patterns of March 6 by forming Candlestick “Inverted Hammer” bars of their own. The “Inverted Hammer” has bullish implications, but requires a higher closing in the next bar for confirmation.
It was on that next day, Tuesday March 10, that the Inverted Hammer’s confirmation arrived. The Inverted Hammer, the High-Wave Spinning Top, and the High-Wave Doji all grabbed hold of the wheel together, whereupon the markets took off on a grand rally, which still persists.
Let’s back up a few days, because there’s more to the story. The preceding Wednesday, March 4, was an “up” day across the Indexes, but there seemed to be nothing remarkable about it in terms of calling a halt to the decline. However, within the ranks of the Dow Industrials there was a hidden message which no one, to my knowledge, recognized on that day.
Specifically, on that day, March 4, General Electric shares spiked to a new low and closed lower on the day, even though the Dow Industrials Average itself closed higher. Perhaps more importantly, it was the shape of the trading pattern that mattered: it was a Candlestick “Hammer,” which is a very bullish signal that requires no confirmation.
GE shares closed three cents lower the next day, March 5, but closed higher on March 6 and, interestingly, also on March 9, on a day when the Dow Industrials Average and all of the S&P’s closed lower.
The bottom line is that the Candlestick “Hammer” pattern in GE shares on March 4, alone within the Dow Industrials and within the Indexes, foretold the change of trend four trading days before it became evident. GE gave a second signal on March 9, the day before the blastoff, when it closed higher even though the Dow and all of the S&P’s closed lower.
It is said that GE is the bellwether of American industry. Perhaps it behooves us to watch and compare price action in GE shares with price action in the Dow Industrials as a group and with the S&P’s, because GE may leave some early clues next time, too.
William Kurtz May 2, 2009 http://www.candlesticksonsteroids.com
