Short Term Market Top Forming? Reversal Indicators? Candlestick Patterns

[bsteadman]

Candlestick Chart of the S&P 500: Reversal Indicator? - Bearish Engulfing Pattern, 10/21/2015

From "Technical Analysis Plain and Simple", Third Edition, Page 264, by Michael N. Kahn:

"The engulfing pattern is a strong reversal signal, especially after a prolonged trend. It is similar to the Western reversal pattern. Only the real body is important in this formation; shadows are virtually ignored.

The bearish engulfing pattern has a black real body the engulfs the prior day's white real body. In other words, during an uptrend, the market gapped higher and closed lower than the previous day's close."

Recap: The S&P 500 closed at a recent low of 188.12 on 9/29 and closed at a recent high of 203.37 on 10/19, up against strong overhead resistance. Thus, the trend has continued upward for just under 3 weeks.

Today, on Wednesday 10/22, for the S&P 500: Open 203.64, High 203.79, Low 201.65 and Close 201.85 - Bearish Engulfing Pattern

Link to additional Bearish Engulfing Pattern information:

http://www.investopedia.com/terms/b/...engulfingp.asp

[bsteadman]

Candlestick Chart of the S&P 500: Reversal Indicator? - Bear Star Pattern, 10/23/2015

From "Technical Analysis Plain and Simple", Third Edition, Page 265, by Michael N. Kahn:

There are various candle combinations called stars, so named because they are located significantly above their preceding candles like a star in the sky. All stars are reversal indicators and are more important after prolonged trends or large moves. A star is a small real body or a doji made on a gap that follows a long real body. Even if the shadows overlap, the formation is still considered a star, because only the real bodies are important.

Today, on Friday 10/23, for the S&P 500: Open 207.24, High 207.95, Low 206.30 and Close 207.51 - Bear Star Pattern

Link to additional 'Star Pattern' information:

http://www.investopedia.com/terms/s/star.asp

It's interesting, and perhaps significant, that the 'star' in the 'Bear Star Pattern' under discussion here, is actually a bearish 'Hanging Man Umbrella' shape. According to Mr. Kahn, on page 264: "If an umbrella appears in an uptrend, it is bearish, and is referred to as a 'hanging man'. The latter's ominous name is derived from its look of a hanging man with dangling legs."

Link to additional 'Hanging Man Pattern' information:

http://www.investopedia.com/terms/h/hangingman.asp