Chris Kimble of Kimble Charting Solutions told clients of his plans to initiate a short position in U.S. stocks mainly due to the prevalence of an obscure technical analysis phenomenon taking place on the price charts for many major asset classes, including the S & P 500 . That obscure pattern was the "Doji star." You can only see the Doji star, which looks like a plus sign, when using price charts in "candlestick" pattern mode. Candlestick charts give traders a way to easily see the open, high, low and close of any security over a designated period of time (day, week, month) in one glance. A Doji is created when the open price almost exactly equals the close price. They occur when a security trades in a wide range but ends the day where it started. Technical analysts believe it signals a time of great indecision over a security, and thus may be a marker of a key reversal in trend. That was on Kimble's mind when he wrote this to clients on Friday: "Doji star patterns by themselves don't always mean a reversal is at hand. When they take place along with support/resistance/ Fib levels in play, that does get my attention, to say the least. … Shorted S & P near channel and Fibonacci resistance." After this call, the S & P 500 tumbled 3 percent to start the week as investors' optimism about the new year rapidly turned to gloom due to a collapse in oil prices and threats of another credit crisis out of Europe. According to Stockcharts.com, the Japanese started to use technical analysis for trading rice in the 17 th century. They would later create the candlestick form of charting and use "Doji" as guidance. According to the Web site: "Doji convey a sense of indecision or tug-of-war between buyers and sellers. Prices move above and below the opening level during the session, but close at or near the opening level. The result is a standoff. Neither bulls nor bears were able to gain control and a turning point could be developing." Using a monthly candlestick chart, Kimble identified a Doji occurring in the S & P 500 in December. Similar analysis identified the pattern in the Nasdaq Composite, the Wilshire 5000 Index, the Nikkei 225, the yen and silver, according to his report. "I am seeing several Doji's right now," said Kimble in an email to CNBC on Friday. It's "maybe the most I have EVER seen at one point in time!" No word from the chart analyst on when he's ready to take off his market short .. but the answer may lie in the stars ... Doji, that is. Read More Scared? Here are top correction protection plays
ALMA telescope located in the Chilean Andes.
Source: ESO | B. Tafreshi | twanight.org
Chris Kimble of Kimble Charting Solutions told clients of his plans to initiate a short position in U.S. stocks mainly due to the prevalence of an obscure technical analysis phenomenon taking place on the price charts for many major asset classes, including the .
That obscure pattern was the "Doji star."