EarningsBeats.com Digest for September 29, 2021
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Hollow Candles Are a Sign of Accumulation and This Stock Had 10 in a Row
I'm a fan of candlestick charts, which have four key data sets that include an open, close, high and low. The highs and lows are marked with what are called "wicks", "tails", "shadows", etc. The rectangle on a candlestick chart represents the area contained within the open and close. A "hollow" candle is not filled and it simply means that the closing price was ABOVE the opening price. A "filled" candle represents a
period where the closing price was BELOW the opening price. I believe the hollow candles to be more bullish as demand outweighed supply, resulting in the higher close.
I ran a scan on StockCharts.com on Monday where I looked for stocks that had printed hollow candles (closes above opens) for 9 consecutive days and had average daily share volume > 200,000 shares over a 50-day period. The scan returned two stocks. I wrote about one of them - Opendoor Technologies (OPEN) - in a Trading Places blog article on Tuesday morning. This blog article can be reviewed by CLICKING HERE. Below is a chart of the second stock, Gentex, Inc. (GNTX), an auto parts company
($DJUSAT):
Just below the price chart, you can see the AD line soaring the past 3-4 weeks. Hollow candlesticks tend to coincide with rising AD lines as AD lines move higher if stocks finish a period in the upper half of that period's trading range. AD lines are also heavily impacted by volume. So when a stock rises on a heavy volume day, the AD line can be significantly impacted. That's what we've seen on GNTX - heavy volume, hollow candles, and
rising AD lines. I would expect any pullbacks to be short-term in nature and likely supported by the rising 20-day EMA.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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