Musings Over Candles

“Candles Exhaust Themselves to Give Light to Men” – from Japanese literature

It was a mixed closure of indices and futures today.

Cash indices (lower row on the chart):
SmallCap produced a candle that likely a continuation candle. It does not qualify for a Hanging Man.
SPX closed with an undecisive doji that could also be viewed as a variation of Harami Cross. At this point I view the bullish and bearish chances equal.
Nasdaq closed with a red candle that failed short to become a Dark Cloud Cover. Most likely, just a day of pause.
DJI closed with a candle similar to the one in SPX. Note that both SPX and DJI closed the opening gaps of the previous day projecting a healthy continuation of the uptrend.

Futures (upper row):
SmallCap closed with a candle similar to the one in SmallCap cash.
– The red candle in SPX does not qualify for the Dark Cloud Cover and possibly is a false negative.
Nasdaq futures closure is the most concerning among all. The candle qualifies for the Dark Cloud Cover and it means that the odds are with bears. However, any bearish development would require a confirmation.
– DJI produced a red candle that is not enough for a Hanging Man. Perhaps it is a false negative.

From candles perspective, I view today’s closure as slightly bullish. Any bearish moves would require strong reversal and confirmations.

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