Trading was quite choopy today but a late day surge brought the Dow and S&P back into positive territory. The smaller caps had good relative strength today as evidenced by the Russell 2,000′s almost 1% gain on the day. Volume was on the light side again, especially compared to the volume on Thursday’s selloff. Given the weak volume I still don’t trust this bounce and I think the market could be setting up some falling three method patterns.
Here are charts of the S&P 500, Nasdaq and Russell 2,000:
Trend Table
No changes
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Up | Up | Up |
| Intermediate | Up | Up | Up |
| Short-term | Up | Up | Up |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
I clicked on the link to the `fallen three methods’ pattern, and it is to a 30-Nov-06 chart. The Nasdaq did complete the pattern the next day, 01-Dec. However, the following day and the day after that the market then went up, not down, and no correction ensued.
Just wondering if you have info on the candlestick with trend charts? Trying to figure out why some candles are hollow and some are not. Tradestation calls these charts “Candlestick with trend”
http://bvitha.files.wordpress.com/2007/05/ma3min52907.jpg
Thanks
Perhaps I’m wrong, but I thought the “Fallen Three Method” pattern was a continuation pattern. Because all trends are up, I’m not clear how this pattern would qualify. Although with the above resistance, it just may pan out.
There were some short-term downtrends in effect on Thursday when the S&P and Nasdaq broke their March trendlines. Perhaps if the pattern plays out those trends will be continued. Time will tell…
Bubs,
I may not understand your question, but I had a problem figuring out what the various odd hollow or solid candles were on StockCharts. I think it’s this: the color of the outline, and usually the wick is also the color of the outline, tells you one thing; whether the candle is filled or not tells you another.
What are the two things? One tells you whether the close was above the prior close, and the other tells you whether the close was above the open.
I’m not sure that the practice is uniform, but I think that the odds are that whether the candle is filled or not tells you whether the close is higher or lower than the open. The odd events are when the period’s close is higher than the prior period’s close but lower than its own open (and vice versa for a `downtick’). That’s why you only occasionally see one of the goofy candles with the odd fill pattern.
Perhaps I don’t have the wits for it, but I find the hollow candle business to be visually confusing and annoying. I generally prefer OHLC bars, with the coloring based on the close versus the prior close. That way I don’t have to remember the convention just to figure out what was the open and what was the close. At the end of the day the close is the money that you sleep with (and green is the color of money, so there).
Will somebody please correct this if it is wrong?
Mike,
You have it right. The thing to remember is that a solid body means the close was lower than the open and a hollow body means the close was higher than the open.
I should change my StockCharts default to stop using the “extra” red or black coloring which indicates whether the candle closed above or below the previous candle. I think that coloring just makes the chart more confusing and doesn’t add very much useful info.
Mike and Mike thanks for the help. I’m going to switch back to the original charts. Thanks again
Bubs