I really like Yahoo for their efficient data management.I went through "Beyond Candlesticks - Steve Nison" again last night then I realised I have mixed up Doji with Spinning Top. Doji is a vertical line (shadow) with a horizotal line ( opened and closed at the same level). A Spinning Top ( the word "Top" can be misleading, it can appear at both market top and market bottom) is a small body with long shadow at both ends (above and below). When the upper shadow of spinning top is longer ( at least more than double the length) than the bottom shadow, it is bearish. But when the lower shadow is long, it is bullish.
Dow formed a spinning top with a long lower shadow and with high volume. It came after a long black candle a day before, this is a bullish formation. Volume is an integral part of technical reading. A key indicator relating to volume is accumulation and distribution. Last night New York trading can be considered as a high volume trading at stagnant prices. The selling is rampant after the previous day sell down and the earlier Asian bourses sell down. At one stage Dow briefly broke the 8000 point and touched a low of 7995. However the high volume rampant selling by the bear has been accumulated by the bulls. Last night volume is technically classified as accumulation volume. Chances is high that Dow is still in Major B and last night low can be the end of c to signal the end of corrective wave (ii). I hope tonight, Dow can confirm the begining of uptrend (iii).
I have another indicator call OBV ( On Balance Volume), it monitors market accumulation and distribution of shares. The OBV so far since the October 08 low is very bullish. In fact if tonight Dow can close possitive, I will have a OBV breakout, a new OBV height since October 08. More significant is that, this OBV is higher than the one set on 2 January 2009 when Dow reach 9034 even though Dow is currently below 9034. OBV breakout always preceed price break out. I hope Dow can confirm tonight.
2 comments:
Last night congress ok the bailout plan which such a speed speaks well for the stimulas package . It is a good sign that tonight DOW could be on the up. I tend to buy the postulation that it could be the B wave
Yesterday EU central bank lower interest rate by another 0.5% to a historical low of 2%. The day before German government pump in another 50 billion Euro to stimulate their economy. The will is there but whether all these plans and actions can turn the economic trend is yet to be seen. However, in the past the stock market normally moves about 6 months ahead of the economy. When everybody can see the sign of economy turning, the stock prices should be quite high already. On the safe side we have to monitor closely the possible development of 1929 great depression.
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