Remember the Bearish Gravestone Doji Star that we looked at back in March, that looked suspiciously like The Bears were going to get squeezed when ARIA rallied right back to 7.30 in the next session?
The Bears, indeed, got squeezed, then a second Bearish Gravestone Doji showed up.
The Bears got squeezed again, then there was a selloff, followed by a rally into a Bearish Long-Leggetty Doji.
Now, QUIT IT. Tha-a-at really looks bearish!
Nope. Not bearish yet. Imagine relentlessly shorting all of those "bearish" looking candlesticks all the way up! Some stubborn players actually do that, which helps to propel the stock ever higher. Yeeks!
Market Lessons:
1. It's fine if we short any scary-looking candlestick that "looks" bearish and "looks like" a top (or the reverse in a downtrend), but let's not be stubborn about it. If the high of the candlestick or candle pattern gets taken out to the upside, GET OUTTA THERE. Forget whatever opinion we have about why a stock "shouldn't" be rallying 100%...200%...300%, etc., and give strong consideration to getting long the stock. Repeatedly shorting a stock like this one will do serious damage to a portfolio. UGH.
2. Don't infer too much from a single candlestick, or even a series of candlesticks, like in early June (the Long Leggety Doji Star, followed by the Bearish Engulfer). Again, shorting that is fine, but we don't want to stay short when Ms. Market clearly tells us that $10.00 isn't the high, as she did.
3. A trend in motion tends to stay in motion and a stock can have HUGE percentage gains in the process, like ARIA has had.
2 comments:
Very good lesson, Melf, about those gravestone dojis!
Mary
Thanks, Mary! They can be very deceptive, like many other things that Ms. Market throws at us ;)
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