Bungee Jumping Guide

Something really unusual just popped up on the charts, and I need to share it with you.

In Candlestick-speak, a “Doji” pattern occurs when the opening cost plus the closing cost for a given time period are the similar, or virtually so. The Doji is understood to become a demonstration of “indecision,” and can be a warning of the feasible selling price reversal.

On October 2, 1987, the DJIA open was 2639.20; the close was 2641, clearly a Doji.
On October 5, the next trading day, the open was 2641.00 along with the close was 2640.20, also clearly a Doji.
Note also that, as between the two days, the closing rates were almost the identical: 2641 and 2640ሌ.
The Crash followed.

Even today, some traders and investors who have been on the scene in October 1987 still recall that the Crash “came out in the blue” or “came out of nowhere.” They might indeed have thought so at the time, and they might believe in their hearts currently that such was the case. I review of the Dow Jones Industrials charts of those days reveal that, to the contrary, the fantastic Crash did not “come out of nowhere” that, indeed, it was several days, and even many weeks, in the producing. One just had to become able to read the Candlestick signals in order to pick up and run to safety after those two days’ worth of early warnings.

Now for the current day:
On June 5, 2009, the open was 8751.65; the close was 8763.10. A Doji.
On June 6, the open was 8759.30; the close was 8764.50.
On June 7, the open was 8764.85; the close was 8763.10.
All of them qualify as Doji.

Now note also that, as between the three days, the closing costs had been practically the very same: 8763.10; 8764.50; 8763.10. That’s a truckload of Indecision!

Incredibly interesting. Will history repeat? We shall see. On the other hand, coming at the top of the strong advance, I read this pattern as Bearish.

Multi-bar Candlestick patterns which display inter-day closings at or about the same selling price ought to have a name. I propose “Kobe Moonbeam” for the bearish version and “Kobe Sunrise” for the bullish version.