Doji Candlestick pattern

Noticed the formation of Doji candlestick patterns on Dec 12th for APPL (source of chart: finance.yahoo.com)

Doji represents a state of uncertainty where neither bulls or bears win.

In Technical Analysis, a candlestick captures the movement of the market for the timeframe/session specified. The session could be a minute, hour, day, week, month...

The top of the candle body represents the open price, the bottom closing price, the end of the upper wick the highest price within the session, and the end of lower wick the lowest price within the session.

Color coding the candle makes it easy to analyze whether the market was bullish or bearish. Typically red indicate a bear, and green a bull. See the price movement of Apple on July 24 and July 31st.

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Dojis are formed when Open and Close price are the same. There are 3 types of Dojis to lookout for:

Long legged Doji: Forms when big upward and downward movements within a session, but neither bull or bear wins. Its a fight. When the overall market trend is moving up or down, the formation of a long legged Doji may be indicative of a trend reversal.

Dragonfly Doji: Show that even though bears have pushed the price down, it returned to the open state. It is a reliable indicator that the trend is reversing.

Gravestome Doji: This is an indicator that the bullish market is nearing an end.

..

% Difference of Close from the highest Close for S&P 500

The highlighted is the  highest Close which happened in September 2018. Source: finance.yahoo.com

Date	Open	High	Low	Close	Volume	% Difference from highest Close	Data is
11/1/17	2,583.20996	2,657.73999	2,557.44995	2,584.84009	95 Billion	11.2952	Monthly
12/1/17	2,645.10010	2,694.96997	2,605.52002	2,673.61011	65 Billion	8.2489	Monthly
1/1/18	2,683.72998	2,872.87012	2,682.36011	2,823.81006	77 Billion	3.0944	Monthly
2/1/18	2,816.44995	2,835.95996	2,532.68994	2,713.83008	80 Billion	6.8686	Monthly
3/1/18	2,715.21997	2,801.89990	2,585.88989	2,640.87012	76 Billion	9.3724	Monthly
4/1/18	2,633.44995	2,717.48999	2,553.80005	2,648.05005	70 Billion	9.1260	Monthly
5/1/18	2,642.95996	2,742.23999	2,594.62012	2,705.27002	76 Billion	7.1624	Monthly
6/1/18	2,718.69995	2,791.46997	2,691.98999	2,718.37012	77 Billion	6.7128	Monthly
7/1/18	2,704.94995	2,848.03003	2,698.94995	2,816.29004	65 Billion	3.3525	Monthly
8/1/18	2,821.16992	2,916.50000	2,796.34009	2,901.52002	69 Billion	0.4276	Monthly
9/1/18	2,896.95996	2,940.90991	2,864.12012	2,913.97998	62 Billion	-	Monthly
10/1/18	2,926.29004	2,939.86011	2,603.54004	2,711.73999	91 Billion	6.9403	Monthly
11/1/18	2,717.58008	2,815.14990	2,631.09009	2,760.16992	80 Billion	5.2783	Monthly
12/1/18	2,790.50000	2,800.17993	2,621.53003	2,695.94995	14 Billion	7.4822	Monthly
12/3/18	2,790.50000	2,800.18000	2,773.38000	2,790.37000	4 Billion	4.2420	Daily
12/4/18	2,782.43000	2,785.93000	2,697.18000	2,700.06000	4 Billion	7.3412	Daily
12/6/18	2,663.51000	2,696.15000	2,621.53000	2,695.95000	5 Billion	7.4822	Daily

Box chart representation

11 sectors of the stock market

Death cross and Golden cross

In Technical Analysis, a Death cross happens when the short term moving average crosses long term moving average and goes below it. This is seen as the start of a bearish market (but is not always the case based on historical trends)

A Golden cross happens when short term moving average crosses long term moving average and goes above it. This is seen as the beginning of bullish market.

See the S&P 500 index over years as an example. The short term is 50 day moving average and long term is 200 day moving average. Source: finance.yahoo.com

An hourly trend during 12/6-12/7/2018 shows formation of the crosses. Source: finance.yahoo.com

Read this marketwatch.com article on 12/7: https://www.marketwatch.com/story/heres-what-the-dow-coming-close-to-a-death-cross-really-means-for-stocks-2018-12-06

Long vs Short trade

Simple defintions:

Long Trade or Buy means the investor is buying stocks with the expectation that the value will go up in future.

Short Trade or Sell means the investor is borrowing stocks from a Broker and selling it to another investor with the expectation of value going down. Once the stocks value decrease, the investor buys back from market and return to Broker.

Good reference: https://www.thebalance.com/long-and-short-trading-term-definitions-1031122

S&P 500 index with 50 and 200 day moving average on Dec 6, 2018

Source: finance.yahoo.com

Goldilocks economy

Found a good definition at https://www.thebalance.com/goldilocks-economy-definition-causes-effects-3305932:

>>
A Goldilocks economy is when growth isn't too hot, causing inflation, nor too cold, creating a recession. It has an ideal growth rate of between 2-3 percent, as measured by GDP growth. It also has moderately rising prices, as measured by the core inflation rate. The Federal Reserve has set this target inflation rate at two percent.

This healthy economy is named after the famous children's story, Goldilocks and the Three Bears. The little girl only ate the bear's porridge that was neither too hot nor too cold. Like the porridge, the Goldilocks economy is one that is "just right."
<<

Treasury Yield Curve Inversion

Stock markets plunged on December 4th, 2018 on the fears that the gap between long-term and short-term treasury yields is narrowing.

In general the 10-year yield should be much above 2-year. The narrowing shows that investors are loosing confidence in the current economic conditions and parking money in long-term bonds. With more investment in long-term bonds, the supply-demand ratio changes pushing down the yield lower.

An inversion of the gap/spread is an indicator of recession. This was reason for the market crash. Ref: https://www.forextraders.com/forex-news/are-you-aware-of-our-most-accurate-leading-indicator-of-economic-peril/

In addition there are other indicators that long-term yields are going lower that short-term. See the spread between 3yr to 5yr yields on 12/3 as compared to 11/20.

Tesla (TLSA) over years

Source: finance.yahoo.com

Microsoft (MSFT) over years

Source: finance.yahoo.com

Google (GOOG) over years

Source: finance.yahoo.com

Netflix (NLFX) over years

Apple (APPL) over years

Amazon (AMZN) over years

Source: finance.yahoo.com

Facebook (FB) over years

Source: finance.yahoo.com

Nasdaq vs FAANG growth

1990s to present. Source: finance.yahoo.com

S&P, Dow Jones and Nasdaq over years

Click to zoom. Created using finance.yahoo.com

GSPC - S&P
DJI - Dow Jones
IXIC - Nasdaq

Before 1980s

1980s to 2000s

2000s onwards

End

Java program to print Fibonacci sequence

import java.text.DecimalFormat;

  

public class Fib {

        public static void main(String args[]) {

                for (int i = 1; i <= 20; i++) {

                        System.out.println("[" + i + "] : " + fib(i) + " : " + new DecimalFormat("#.###").format(ratio(i)));

                }

        }

        private static int fib(int n) {

                if (n==1 || n==2) {

                        return 1;

                } else {

                        return fib(n-1) + fib(n-2);

                }

        }

        private static double ratio(int n) {

                if (n > 1) {

                        return (double)fib(n-1)/(double)fib(n);

                } else {

                        return 0;

                }

        }

}