The appearance of a Bearish/Bullish (Doji) Star Pattern in an uptrend/downtrend shows that buyers/sellers are now losing control and the market is moving to a deadlock between buyers and sellers. This deadlock or balance between buyers and sellers may result because of a diminution in the buying force or an increase in the selling force. The star tells us that the strength of uptrend/downtrend is now dissipating and the market is increasingly vulnerable to a setback/advance.
Conclusion: These patterns require follow thru confirmation. Note however, Transports, large caps, mid-caps are all backed up by low RSI<2> readings.
As noted in yesterdays Semiconductor post, I believe Intel earnings report will bring in a short term top of some sort. Either an exuberant exhaustion style high, based on good numbers, or a disappointment ceiling, based on bad numbers.
The question remains, will this be the high of the year????? Not sure yet.
Tim Kathlina
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