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CANDLESTICK CHARTING


Bearish Candlesticks Point To Reversal In JB Hunt

08/09/04 01:50:01 PM
by Arthur Hill

Even though the broader indexes have been weak in 2004, truckers just kept on trucking. However, recent bearish candlesticks point to resistance and a reversal for JB Hunt (JBHT).

Security:   JBHT
Position:   Sell


Figure 1: Weekly chart of JB Hunt.

The weekly chart extending back to January 2003 offers some perspective. The stock advanced from 11.62 to 39.6 over the last 17-18 months. The trendline extending up from Mar-03 sets the tone for this advance and has been touched at least three times. The stock is still holding this trendline, but recent candlesticks suggest an impending reversal that could retrace a portion of the prior advance. A typical 50% retracement would extend to around 25-26 and this area is confirmed by a 7-8 month consolidation (gray oval).

Turning to the candlesticks over the last seven weeks, we can see indecision and selling pressure starting to take hold. The high at 39.60 is marked with a doji (black arrow). This candlestick looks like a plus sign (+) and forms with an open that is relatively equal to the close. After a whole week of trading, the doji shows virtually no change from open (Monday) to close (Friday) and hence indecision.

Figure 2: Seven month view of JBHT.
Graphic provided by: MetaStock.
 
The doji shows indecision, but alone is not enough to foreshadow a reversal. The black oval shows an evening doji star (white candlestick, doji and red candlestick). This is a bearish reversal pattern and the high volume decline shows increased selling pressure (red arrow). The gray oval shows a bearish engulfing (white candlestick and red candlestick). After the white candlestick, the stock opened (Monday) above the prior close and then closed (Friday) below the prior open. Sellers took over as the red candlestick completely engulfed the white candlestick. These two bearish reversal are quite ominous and further weakness below the 9-July low (31.76) would open the door to a deeper pullback and the retracement target mentioned in the first paragraph.



Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

Title: Editor
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