The DOW and the S&P 500 stock indices are in the process of printing classic shooting star candles for the month of January.
There haven’t been more doomy candlesticks on these two indices for a decade, and they portend a major, major top.
The NASDAQ doesn’t quite share this pattern so it might be worth keeping your tech stocks and selling off everything else
But this looks like the stock market has carved out a multi-year top.
Stocks opening up on the first of the new month is very good for the bearish case.
Sh*tting the bed on the first of a new month would lead to a gap down, which normally later gets filled.
It’s the cleanest bearish candle on the monthly chart since the Obama bottom of March 2009.
The only monthly candle which comes close is the Jan 2010 – which to be fair, was a failure.
You need stops on these mothers if playing from the short side. Mine is in the logical place, i.e. above the January top.
What we bears really need to see is a nice red candle for February 2010. Any repeat of Feb 2020 (a hammer candle) and the bearish case becomes questionable.