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June 09, 2006
Bullish Candlestick Reversals Abound
Stocks declined in the morning and rallied in the afternoon. As a result a number of bullish candlestick reversal patterns formed on Thursday. These include piercing patterns, hammers and bullish engulfings. The hammer is a single candlestick pattern and the others form with two candlesticks. All three require confirmation and follow through over the next day or two is needed to forge a short-term bullish reversal. Ideally, follow through should come with expanding volume. Follow through on low volume would show lack of confidence. Today I will highlight a number of stock charts with these bullish candlestick reversals.
Energy stocks rebounded yesterday and RIG formed a big hammer near its May lows. Volume surged and this reinforces support around 75. Follow through above 80 is needed to confirm the hammer.
Anadarko Petroleum (APC) formed a piercing pattern on high volume. The piercing patterns forms when the open is below the low of the black candlestick and the close is above the mid point. This pattern formed at support from the March low and a break above 50.5 would confirm the pattern.
Sealed Air (SEE) formed a high volume hammer at support. A break above 52.5 would confirm the hammer and turn the short-term trend bullish.
Dow component 3M (MMM) formed a piercing pattern at support from the prior gap.
Lowes (LOW) formed a bullish engulfing with above average volume. The stock found support near the late May gap and a break above 64 would turn the medium-term trend bullish.
Apple (AAPL) formed a bullish engulfing at support yesterday. Support stems from the March low and the reversal formed on good volume. Now for some follow through above 68 to confirm.
Posted by Arthur B. Hill at June 9, 2006 06:58 AM