Candles and Financial Stocks

[james_gsx 16]

Well then lets talk about the candles on BSC, I would definitely call that a correction and the stock is definitely in a down trend. But if you look at the last few candles they are squeezing in between the 8 and 21 EMA the last two days have produced dojis... both days have less volume than the previous. Could you possibly use VSA to figure out who is buying/selling?

 

Just from looking at the chart, I would say it almost seems as if buying has been exhausted and they could be continuation dojis - but as we all know anything new from the Fed and this stock will rocket higher.

 

 

Now lets look at the dow. We have a nice bullish candle that broke through the 21 EMA and opened right on top of the 8EMA, normally thats a very bullish sign. In fact if we look back to around August 6th-13th nearly the same thing, we opened on top of the 8 EMA and closed well above the 21 EMA only slam on the ground the next day. What I find interesting about that day is it was right at a pivot point where there was previous resistance between the end of May and middle of July. Right now we are doing the same thing, we found resistance again Friday on that bullish candle (with very low volume).

 

 

The weekly chart is much the same, we are pushing right against resistance. In fact we closed nearly at the high of the previous week and again much lower volume and a clear down trend on the weekly chart. But as we all know, if you look at the "long term" trend that hasn't yet been broken.

 

 

I think we will see a fight between the bulls and the bears, if we move higher the next stop will be 13,700 so if we close higher tomorrow then it might be a good idea to go long. I think this last week was a lot of the same thing - people finding cheap plays and picking them up for a quick gain. Obviously though they feel confident going into the weekend holding a long position because of Fridays candle. But who was behind the low volume and how does that go into the validation of the candle?

 

Sorry if my post was all over the place, if something didn't make sense just ask me and I will try my best to clear it up.

[brownsfan019 17]

James,

 

Here's my thoughts on BSC...

 

 

 

As for your DIA analysis, I can appreciate the work you are doing, so I say keep it up. Since there's so many ways to trade, I don't necessarily follow everything that you've stated here, but it does look like excellent work. I am a candle purist and in my opinion, you needed to ALREADY be long, not considering a position now. That's just my opinion, but it's nice to have this discussion since the Candlestick Corner can be a bit quiet... :blushed:

 

Side note - you're obviously doing some homework here and that should be recognized. Not sure how old you are and/or what your future plans are, but I see the groundwork of a technician here in the making... We'd all love to just trade our own money from the Bahamas, but that's not always the case, at least in the beginning. I would start building a little portfolio of your analysis now if you think that some kind of analyst/technician job could be of interest later. I mean, you are already doing the work, so just do it assuming this could be your ticket to a job in Manhattan helping to run a billion dollar mutual fund or hedge fund. I offer this advice b/c there's some stuff that I wish someone would have told me when I was younger.

[james_gsx 16]

GS may be a good play, I like the hammer on the weekly chart. Look how last week price nearly fell to the 200 SMA then the bulls took control. Now notice how the daily chart looks familiar to that of BSC, but we are finding support on the 8 EMA. Again though the falling volume worries me, but since it's so widespread I'm willing to just accept it.

 

 

 

btw Brownsfan, if you want to move these posts and start a similar financials thread then that is fine with me. I know this is sort of going off topic.

[james_gsx 16]

BSC broke support today along the 8 EMA - could this be a leading indicator of what's to come? Volume was higher but still very light.

 

GS is still finding support on the 8 EMA and moving sideways on lighter and lighter volume.

 

MER has a gap that is yet to be filled, and shows a very similar candle to BSC before it broke support today. Again, we see falling volume over the last few days.

 

LEH - much of the same. Stuck between the 8 and 21 EMA with falling volume. Although the candles are slightly different, I am still worried that it can't break resistance. I rarely use RSI, the only times I pay attention to it is when I see some sort of a pattern forming. On all financial stocks I am seeing support and the line turning back down.

 

They are all forming some sort of a wedge. Something will push these stocks one or the other sometime this week I believe. Now the question is, what is there currently in the chart that could point us one direction or the other?