No. of Recommendations: 0

I’m not saying any of the signals listed below should be acted on. They’re just the tentative results arrived at by taking BarCharts’ Top 100 and Bottom 100 stocks and running them though STICKS. E.g., BarCharts (using mainly Western-style technical indicators) gives UHT a 'Sell' rating and rates its confidence in that signal at 88%. But STICKS (using Candle Pattern Analysis) forecasts a short-term reversal. STICKS provides the following commentary:

The Bullish Deliberation pattern is a three-day bullish reversal pattern. The pattern begins with two consecutive long black days that occur in a downtrend. The third day is a Star or relatively small black day that may gap away from the prior day's black real body. The first day of the pattern is a long black day that occurs in a downtrend. The close of the first day is below a 10-period moving average. The second day is also a long black day. The strength of the downtrend attracts new bears, and the third day opens at or below the close of the previous day. The third day is also a black day. With three consecutive black days in a downtrend, the current move down seems secure.

But, upon closer examination, the Bullish Deliberation pattern shows that the current downtrend is actually exhibiting signs of weakness. First, the high-low range of the third day is less than that of the second day. Specifically, it is less than 75% of the second day's high-low range. Second, the body range of the third day is less than the body range of the second day. The program requires that it be less than 50% of the second day's body range. Third and last, even though the black real body of the third day may gap away from the black real body of the second day, the gap is less than 20% of the second day's high-low range.

And so, while the second and third days are making lower closes, the distance between the closes is most likely shrinking. This means that the strength of the downtrend is deteriorating. If the third day is a Star or a Doji Star, watch for the next day to generate a possible Morning Star or Morning Doji Star pattern.

Who's right in this instance, BarCharts or STICKS? For now, I'm to run the experiment on paper. But if the signals provided by Candle Pattern Analysis can --on average and over the long haul-- provide a trading edge over signals provided by Western-style indicators, then I'll go live.


GAME Har. Cross -
HPQ Harami -
LACO Harami -
NDZ Harami -
AFOP Harami -
QNST Harami -
HAIN Harami -

UHT Deliberation+
FNLC Engulfing +
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