On Monday one of my favourite students, who calls himself Mr Angry, contacted me about the market displaying several doji bars.
I responded by saying he should focus on the financial sector, namely look at GS and JPM for their doji bars from Friday. I did also mentioned a few insurance stocks to make the point that the dojis were occurring in a clump of stocks that were in similar sectors. When you see Dojis happening all at once, you have better odds of a successful reversal trade. Remember the big reversals from last year (June 24th and October 9th in particular, and even February 4th and 5th this year) all started with Dojis on the indices and several major stocks on all those dates.
JPM and GS have reversed nicely as you’ll see in today’s video, and all but two of the others I mentioned also started to reverse, albeit their dojis weren’t as clear cut as the two financial powerhouse stocks.
Remember, with Doji reversals, the OVI is a bonus to have, it’s not a prerequisite.
Onto the broader markets, if you’re trading breakouts or in line with the trend, it does pay to have the OVI on your side. This is now a statistical fact, which I’ll be talking about more in the next few weeks.
The project involving a firm of hedge fund quants is coming to a conclusion after several months. It’s been a major piece of work – more than I imagined, but the outcome will be worth the wait.
Lastly, the political uncertainty still remains in the Crimea, but up till now the markets have shrugged that off.
