Tuesday, July 11, 2006

Buy Me Don't Buy Me

Here is an example of the "buy me" formation along with a good example of one that should be passed.



At point 1 we see a small white candle at bar 3 and itappears as if the stock is turning around. The climb never exceeds the long black candle at bar 2 and finally at bar 5 resolves itself as a doji. That is the first real indicator that this is not a good buy.

On the very next day we get a long black candle gap down. This is followed by a spinning top (indecision) and then a black doji. The fourth candle prints a hammer (2) and that says "buy me" to all who care to listen to the market.

As usual the charts come from Prophet.net - an excellent site.

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